Axis Bank and Ranjan Pai’s Claypond Capital in Talks to Invest in Gold Loan Startup Rupeek Amid Valuation Cut

• ByStartupStory     |    May 4, 2024

Axis Bank, alongside Ranjan Pai’s investment office Claypond Capital, are in discussions to invest in the gold loan startup Rupeek. This move could see the startup’s valuation decrease, a source familiar with the matter revealed. Rupeek, which previously reached a peak valuation of $600 million in July 2022, is now looking at a valuation between $200 million and $250 million.

“Pai’s office is looking to invest in Rupeek but the amount has not been finalized yet,” a source disclosed. The participation of Axis Bank is seen as crucial to the funding round, indicating a deeper strategic collaboration may be on the horizon.

Rupeek has faced a challenging period marked by a regulatory crackdown and a business slowdown. Economic Times reported on these developments on March 15, highlighting the potential for a down round, where a company secures capital at a lower valuation than in previous rounds.

Adding to the complexity of the situation, the Reserve Bank of India (RBI) has tightened regulations around gold loans, impacting the entire sector and influencing investor sentiment. “The regulatory environment has had a wider impact on investor sentiment as well as future growth prospects,” a fintech investor explained. “That’s reflected in new funding valuations.”

Despite these hurdles, Axis Bank is reportedly seeking to integrate Rupeek’s services to offer a doorstep gold loan facility, mimicking similar services like that offered by Federal Bank. The bank has seen a remarkable growth in gold loan disbursals, with a compounded monthly growth rate of 94% in the last half of the fiscal year 2024.

This potential investment and partnership come at a time when Rupeek has witnessed a stagnation in its asset management. As of December last year, the startup’s assets under management stood at Rs 1,659 crore, nearly unchanged from Rs 1,669 crore in March 2023. However, there was a silver lining as the asset quality showed improvement with overdue loans more than 90 days dropping to 2.3% in December from 4.1% nine months earlier.

Rupeek, headquartered in Bengaluru, was established in 2015 and has since raised about $164 million from various investors including Accel and Bertelsmann.

The investment landscape for venture-backed startups in India has been challenging, with significant valuation corrections observed across sectors, impacting companies like Udaan, Byju’s, ShareChat, and PharmEasy. Other startups like Swiggy, Pine Labs, and Meesho have also seen valuation adjustments in light of changing regulatory and economic conditions.

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