Lendingkart, the Fullerton-backed digital lending platform, is all set to raise INR 100 crore (~USD 11.7 million) in venture debt from InnoVen Capital India Fund. This comes just weeks after a major leadership change and a disappointing financial performance. Clearly, the company is focusing on capital consolidation while dealing with profitability headwinds.
The Deal Details
As per the RoC filings, Lendingkart’s board has approved the issue of 10,000 NCDs of INR 1 lakh each. The debt will be raised in two tranches and will be used for general corporate purposes including debt refinancing and possible investment in subsidiaries.
A company spokesperson said the funds are being raised to support operational continuity and strategic objectives as the company navigates a tough macro-financial environment.
Financials and Leadership Change
The debt raise comes at a critical time. Lendingkart reported a net loss of INR 253.1 crore in the first nine months of FY25, a sharp reversal from FY24 net profit of INR 3.3 crore and FY23 profit of INR 118.8 crore. India Ratings attributes this decline to rising credit costs and deteriorating asset quality which have eroded returns on average assets under management (AUM).
In response to these pressures, Temasek-backed Fullerton Financial Holdings, which recently acquired a 55.57% stake in Lendingkart for INR 252 crore as part of the company’s Series E round, has brought in a new CEO. Former DBS Bank executive Prashant Joshi was appointed CEO last month, replacing co-founder Harshvardhan Lunia at the operational helm.
Lendingkart IPO Plans
Lendingkart had earlier mentioned IPO plans when it reaches an AUM of INR 10,000 crore. With an AUM of INR 7,250 crore as of 31 March 2024 and INR 2,807.5 crore added in the first nine months of FY25, it seems to have crossed that mark. However, despite earlier statements that an IPO would happen within 18-24 months of hitting this target, the company now says it has no immediate plans for an IPO.
This is a sign of the strategic shift happening as Lendingkart deals with financial constraints and a more watchful regulatory environment.
Fintech Volatility and Regulatory Scrutiny
Lendingkart’s pivot comes at a time of great change in India’s digital lending space. RBI has cracked down on NBFCs doing high risk unsecured lending—Navi and DMI Finance were banned from lending last year. Though Lendingkart hasn’t faced similar action, the message is clear: asset quality and governance will decide who survives.
Competitors like KreditBee, Kissht and Moneyview are planning IPOs to ride the wave of investor interest before the headwinds get stronger. Zepto has deferred IPO citing market volatility.
The Investment Thesis: Back to Basics with Debt and Digital Reach
Founded in 2014 by Harshvardhan Lunia and Mukul Sachan, Lendingkart has raised over USD 370 million (~INR 3,160 crore). It provides unsecured working capital loans to MSMEs with an average ticket size of INR 60,000-70,000 and personal loans under the brand ‘Upwards’. The company does co-lending and co-origination partnerships to generate 80% of its loan book which reduces capital requirement but limits margin flexibility.
The INR 252 crore Series E funding from Fullerton was for scaling, building risk mitigation infrastructure and technology led underwriting. The latest debt round from InnoVen is likely to be for immediate liquidity needs rather than aggressive growth.
Outlook
Lendingkart’s decision to raise debt instead of equity in this environment can be seen as a cautious signal to investors. It preserves equity dilution at a time when its valuation has plummeted from USD 350 million (~INR 2,990 crore) in 2020 to USD 100 million (~INR 855 crore) today. But mounting losses and tough macro financial environment may force further funding rounds at tougher terms.
The company’s recovery depends on how well the new leadership can get back to profitability, improve asset quality and rebuild investor confidence—all while staying compliant in a highly regulated lending space.
Final Words
Lendingkart debt raise from InnoVen is not just a funding exercise—it’s a test of its survival in a chaotic environment. As the company builds its balance sheet and reworks its strategy under new management, we will see if this debt raise is a step towards a sustainable recovery or just a pause before more radical surgery is required. For more details related to IPO GMP, SEBI IPO Approval, and Live Subscription stay tuned to IPO Central.