Manipal Group's Claypond Capital and Axis Bank in Talks to Invest in Gold Loan Startup Rupeek

Manipal Group chairman Ranjan Pai’s investment office, Claypond Capital, and private sector lender Axis Bank are reportedly in discussions to invest in the gold loan startup Rupeek, sources familiar with the matter revealed. The investment round may involve a reduction in the valuation of Rupeek, which is backed by Accel and Peak XV Partners.

Negotiations with Axis Bank are in the early stages, and the new investor consortium is finalizing its plans, according to insiders.

“One of the sources mentioned that Pai’s office is considering an investment in Rupeek, but the exact amount has not yet been decided,” said one individual. “Axis Bank’s participation will also be crucial for the deal, with the valuation expected to be around $200-250 million.” The investment round will also witness existing investors selling a portion of their shares.

Recent filings with the Registrar of Companies (RoC) indicate that Rupeek secured approximately Rs 50 crore from asset management firm 360 One (formerly known as IIFL Wealth) on March 20, 2024. This funding is being obtained at a discount of about 60% from Rupeek’s peak valuation of $600 million in July 2022.

The Economic Times initially reported on March 15 about the possibility of a down round at Rupeek, influenced by a business slowdown and regulatory actions in the sector.

Axis Bank aims to enhance its collaboration with Rupeek by developing a doorstep gold loan service for its customers, similar to initiatives by Federal Bank and others. The lender has observed a significant rise in gold loan disbursals, with a compounded monthly growth rate of 94% in the last six months of FY24.

Overall, Rupeek’s potential partnership with Axis Bank reflects broader trends in the gold loan sector, which has seen outstanding loans exceed Rs 1 lakh crore in March, up from Rs 89,382 crore a year earlier according to RBI data. However, regulatory concerns have impacted investor sentiment and funding valuations across the fintech industry, including Rupeek.

Rupeek, founded in 2015, has raised approximately $164 million from investors like Accel and Bertelsmann. The company, alongside other players like Indiagold and Oro Money, operates in a sector witnessing shifts in valuation dynamics due to macroeconomic changes and regulatory influences.

As the investment landscape adapts to evolving market conditions, many venture-funded startups are experiencing valuation adjustments, reflecting the recalibration of growth prospects and investor sentiment.