Fintech startup Cred has recently assented to buying credit of Software provider CreditVidya in a speculated equity and cash deal.
What's happening: Subject to National Company Law Tribunal approval, fintech company Cred is reportedly buying shares of CreditVidya in a deal consisting of equity as well as cash. Post-purchase of CreditVidya to continue operating independently.
CreditVidya's employees will gain access to Cred's ESOP.
Backdrop: The acquisition comes at a time when the Indian sector of online lending is coming towards consolidation owing to the Reserve Bank of India's recently launched digital lending guidelines.
These guidelines emphasize the role of regulated entities such as non-banks in a way that reduces lending and distribution platforms as mere selling agents.
Another big consolidation move in the sector was the acquisition of pay later platform ZestMoney by PhonePe.
Parties involved: CreditVidya was founded in 2012 as a loan underwriting platform helping banks as well as non-bank financial companies assess better credit.
In contrast with CreditVidya which focused on inclusion of first-time borrowers in credit economy, Cred has largely focused on people with credit cards and higher credit score ratings.
By the numbers: CreditVidya has since its its inception raised around $10 Million in totality and roped in investors like Kalaari Capital, Matrix Partners and Bharat Innovation Fund.
Cred is backing the debt marketplace CredAvenue, operating an active credit line with Cred Cash and acquired corporate spendings management platform Happay amongst its diverse portfolio.
What's next: The acquisition allows Cred to tap into CreditVidya 's consumers which includes those without a credit score enabling Cred to expand its overall consumer base.
Conclusion: Cred's acquisition of CreditVidya allows for it to expand its customer base and tap into the potential of those consumers without a credit score.
