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Context is everything.
Detailed stories on technology startups, business and economic current affairs.
Detailed stories on technology startups, business and economic current affairs.
Its Rs 1,050 crore bet on the five-year-old company—valued at an implied 11.2x revenue multiple and a promoter with baggage—raises serious questions around due diligence.
Earlier this month, publicly listed real estate and financial services company Indiabulls said it will acquire a 70% stake in Fintech Cloud, a five-year-old finance company, for Rs 1,050 crore (about $109.5 million), valuing the business at Rs 1,500 crore ($156.6 million).
On paper, it reads like a routine control acquisition. A closer look raises harder questions.
Fintech Cloud has been largely dormant and reported no revenue until recently. Multiple people The Morning Context spoke to said they were surprised the transaction cleared due diligence, pointing to concerns around valuation and the background of those associated with the company. Indiabulls …
The loan aggregator keeps sending updates on WhatsApp even to users who haven’t applied for a loan. The company is exploiting a grey area in India’s telecom regulatory framework and WhatsApp’s policies.
The fintech is gearing up to go public at a $5-6 billion valuation. Much like beauty, value lies in the eyes of the beholder, but public markets are rightly cross at obscene startup valuations.
The fintech’s NBFC has seen its loan book decline by 92% in just two years and its global ambition has come undone. The company, though, keeps borrowing, restructuring and diversifying.
