Spat over, BharatPe says back on track for profitability and an IPO

Mumbai: Fintech lender BharatPe is aiming for its first full-year profitability thisfinancial year (2024-25) as it puts behind the yearslong acrimony with its high-profile former chief and prepares to enter the public markets.

The company, however, is yet to start the process of appointing investment bankers for an initial public offering of its shares, said Nalin Negi, who took over as BharatPe’s fulltime chief executive officerin April last year.

“It (the IPO) will be a journey of maybe 18 to 24 months and also depends on market conditions, etc. But we are really thinking towards that and taking some steps towards it," Negi said in an interview with Mint. “At this point of time, we are discussing with bankers… maybe in a few months time we will start the process (of appointing the bankers)."

Negi didn't disclose the potential IPO size.

BharatPe’s profitability and IPO ambitions aren’t new. In a 4 August 2022 interview with Mint its chairman Rajnish Kumar had said the company was focused on achieving profitability in 6-10 months and looking for an IPO in 18-24 months.

But the latest discussions with bankers for an IPO come after erasing several hurdles, including the run-ins with ousted co-founder Ashneer Grover. In September, BharatPe reached a settlement with Grover, ending years of acrimonious legal battles and public disputes. As part of the agreement, Grover will not be associated with BharatPe in any capacity or be a part of its shareholding.

Currently, Peak XV Ventures holds an 18.44% stake in BharatPe, Insight Partners has 11.44% and Ribbit Capital 10.45%, company data show.

Also read | Is the fintech sector in India under a regulatory siege?

First stop: Ebitda profitability

BharatPe, founded in 2018, has a payments operation, an investment platform, and a lending service provider business. It gets more than 90% of its revenue from the merchant segment, which includes loans and revenue from payment soundboxes and point-of-sales terminals.

The company is also looking to launch a cobranded credit card business with Unity Small Finance Bank and will soon launch a credit line product on UPI.

BharatPe, which has 2.5 million active merchants, has registered a gross merchandise value (GMV) of ₹15,500 crore from both its merchant and consumer businesses.

The company recorded consolidated revenue from operations of ₹1,426 crore in 2023-24, up from ₹1,029 crore in the previous year, and narrowed its consolidated pretax loss to ₹474 crore from ₹941 crore.

Negi said BharatPe turned Ebitda profitable for the first time in October. Ebitda refers to earnings before interest, tax, depreciation and amortization and is a key measure of operational efficiency.

Also read | Getting Pine Labs IPO-ready: What ‘fintech bully’ Amrish Rau can learn from Paytm

Trillionloans andLiquiloans

Negi also said BharatPe was looking to acquire the remaining 39% in its non-banking finance company (NBFC) arm Trillionloans Fintech, which is co-promoted by NDX Financial Services Pvt. Ltd.

Mint reported in March 2023 that BharatPe had acquired a majority stake in Trillionloans,whose founders Achal Mittal and Gautam also owned peer-to-peer lending NBFCLiquiloans.

Negi said Liquiloans stopped its peer-to-peer lending business in August last year after RBI tightened regulations around P2P lending, and that it was in the process of repaying borrowers by March this year.

Trillionloans has assets under management of ₹3,000 crore and capital adequacy ratio of 21%.

“We have no plans of listing Trillionloans. First we will acquire a 100% of it," Negi said. “It is BharatPe which will get listed. That could be 2-3 years, sooner or later, plus-minus here and there."

Also read | BharatPe acquires NBFC Trillionloans

The Unity Small Finance Bank stake sale

Mint reported on 3 January that BharatPe was looking to sell a 10-25% stake in Unity Small Finance Bank had appointed investment bank Rothschild & Co. to help it look for buyers. BharatPe holds a 49% stake in the small finance bank.

Negi confirmed the plans but said BharatPe had till 2030 to complete the stake sale process involving Unity Small Finance Bank and that it would not affect its IPO plans.

As per its agreement with the Reserve Bank of India, BharatPe has to lower its stake in Unity SFB to 10% by 2028.

“We need to come down (bring down the stake in Unity SFB) within eight years of operations. It is only two-and-a-half to three years. So enough time is available for us to be doing this," said Negi. “There is no hurry as such. If we find the right partner, whether a small stake or slightly larger stake. But there is no immediate necessity," he added.

Also read | BharatPe begins stake sale process in Unity SFB