Lendingkart’s cash crisis; OfBusiness $100 million secondary

Happy Thursday! Cash-strapped Lendingkart is staring at a massive valuation cut. This and more in today’s ETtech Morning Dispatch.

Also in the letter:
■ Tata Electronics gets show-cause notice
■ Licious, BharatPe FY24 results
■ Govt extends bid date for GPU tender

ETtech Exclusive: Inside the cash crisis, big valuation cut at Lendingkart

Lendingkart massive valuation cut Harshvardhan Lunia THUMB IMAGE ETTECH

Harshvardhan Lunia, CEO, Lendingkart

Lendingkart is in talks with Fullerton Financial Holdings (FFH), its largest shareholder, for an internal funding round at a major valuation cut. We have all the details in today’s scoop.

Driving the news: The Ahmedabad-based MSME-focused lending startup had been in the market to raise an equity funding round for a year now but nothing fructified. FFH, which owns 38% in Lendingkart, is now looking to acquire a controlling stake in the firm. The deal could drastically slash Lendingkart’s valuation to $100 million from around $350 million in 2020, when it had closed its last major equity round.

Why does it matter: Lendingkart, which had turned around in 2023 after the pandemic years, had slipped into stress in the current financial year. In FY24, it reported a net profit of just Rs 3 crore at the consolidated level, compared to Rs 119 crore in the previous year. As a lending company, it is also seeing serious issues on its asset quality, which is further increasing its credit costs.

Tell me more: “There were discussions of a funding round a year ago, but those fell through due to a valuation mismatch. That time, Lendingkart’s financials were looking good due to a strong comeback after Covid. But now the default percentages on loans have inched up significantly“ a person in the know said.

ETtech Exclusive: Zodius exits OfBusiness with $100 million secondary share sale

Asish Mohapatra OfBusiness B2B ecommerce firm secondary share sale THUMB ETTECH

Asish Mohapatra, cofounder, OfBusiness

Zodius Capital has completely exited business-to-business ecommerce firm OfBusiness, in which it was an early investor, via a secondary share sale of around $100-120 million, sources told us.

Deal details: Zodius Capital has netted more than $100 million in returns on its initial $8 million investment in OfBusiness in late 2016, Gautam Patel, cofounder of the venture capital fund, told us. He is also the founder and managing partner of venture fund Z3Partners.

This would be the second-largest secondary deal in the new-age sector this year after a $200 million share sale in Lenskart.

Tell me more: Another early investor, Z47 (formerly Matrix India Partners), is looking to sell its stake worth at least $50-60 million and is in talks with multiple secondaries-focused funds like TR Capital and Oister Tribe Ace Fund. As per Tracxn, the venture fund holds a 0.8% stake in the Gurugram-based firm, which is planning a listing next year.

ET reported on October 10 that Z47 is putting on sale its stakes in its portfolio firms worth $150-180 million.

Valuation math: For OfBusiness — which was last valued at $5 billion — the latest deal has been struck at a valuation of around $4 billion. For the Z47 transaction, the valuation may slightly increase as the contours are being finalised, people in the know said.

Also Read: OfBusiness FY24 operating revenue up 26% on year to Rs 19,296 crore

Tata Electronics gets show cause notice over TN fire mishap

The Tamil Nadu government has served a show-cause notice to Tata Electronics under the Directorate of Industrial Health and Safety (DISH), demanding an explanation for the massive fire that engulfed one of its units last month.

Notice alert: The notice asked the occupier and factory manager to explain their side of the story within a week unless they seek an extension. It also said that the fire broke out because of the failure of the thermostat control at the anodising plant and asked Tata Electronics to share their findings.

Story so far:

Tata Electronics suffered a massive fire in one of its units on September 28
DISH had determined the “most probable cause” for the fire that engulfed the Tata Electronics unit in Hosur
Apple’s supplier responsibility (SR) team had been at the Tata Electronics facility in Hosur since September 29 to “counsel and advise”.

Meanwhile, the firm also carried out an investigation, and the findings are yet to be placed in the public domain.

FY24 Earnings Corner

L-R: Abhay Hanjura and Vivek Gupta, cofounders, Licious

Licious: In FY24, Licious’s parent company, Delightful Gourmet, reported an 8% year-on-year (YoY) fall in its revenue to Rs 685 crore. It also underscored a reduction in exposure to modern trade and local stores for the revenue decline as the company started focusing more on its own fulfilment channels. The Bengaluru-based firm also said its loss narrowed 44% YoY to Rs 294 crore in FY24.

BharatPe: Fintech firm BharatPe reported a 39% jump in operating revenue to Rs 1,426 crore in FY24 from Rs 1,029 crore a year earlier. It also narrowed its consolidated loss before taxes by 50% to Rs 474 crore from Rs 941 crore in the year-ago period, the company said in a release.

LTTS: L&T Technology Services (LTTS) reported a 1.9% sequential rise in net profit to Rs 319.6 crore for the second quarter of this fiscal. On a YoY basis, net profit increased by 1.3%. The IT engineering firm saw broad-based growth across all verticals and geographies, with revenue rising 4.5% sequentially to Rs 2,572.9 crore in Q2. YoY revenue was up by 7.8%.