Marking its third acquisition in three months, BSE-listed fintech startup SME Veefin Solutions has acquired a 26% stake in EpikInDiFi in a share-swap deal that values the latter at INR 125 crore.
Veefin will increase its stake in EpikInDiFi to 100% over the next two years in phases, co-founder and COO Gautam Udani told Inc42.
As part of the deal, EpikInDiFi founders Rajendra Awasthi, Sushmitshri Babu and Vaidyanathan Balasubramaniam will acquire stakes in a subsidiary of Veefin. However, Udani did not reveal the size of the stake or the name of the subsidiary in which the founders will acquire stakes. Additionally, Veefin plans to invest INR 25 crore in EpikInDiFi over the next two years.
Founded in 2017, EpikInDiFi offers cloud-based fintech automation solutions for banks and financial institutions. It says its analysis-driven solutions like Business.ezee, Identity.ezee, Lend.ezee and Collect.ezee help institutions streamline processes, make smarter decisions, improve operational efficiency and reduce NPAs.
The acquisition of EpikInDiFi will help Veefin generate new revenue streams by strengthening its presence in the personal loans, buy now pay later, green loans, credit cards, mortgages and SME loans segments. Veefin claims to have a strong presence in the working capital solutions segment.
Udani also said that one of the reasons behind the acquisition is that he values EpikInDiFi’s product line a bit higher than Veefin’s loan origination system (LOS), adding that it could have become a competitor to Veefin in the near future.
The acquisition will add 50 banks and NBFCs to Veefin’s portfolio. This will enable Veefin to sell products from its other subsidiaries to EpikInDiFi’s customers.
“This year has been a pivotal one for Veefin Group, both in terms of strengthening internal capabilities and leveraging inorganic growth opportunities to expand beyond supply chain finance and offer all solutions under working capital finance to our Indian and global clients,” Udani said.
It is relevant to note that in June, Veefin acquired a 26% stake in Regime Tax Solutionsa company that works with advanced GST compliance, Accounts Payable (AP) and Accounts Receivable (AR) automation.
Later in August, he acquired the Indian arm of global IT services provider Nityo Infotech Singapore for an undisclosed amount.
In a statement, Veefin said the total expected amount of the first tranche of the three acquisitions in the last three months is INR 215 crore (cash and equity).
Founded in 2020, Veefin provides white-label supply chain financing and lending solutions for banks and NBFCs, including an end-to-end lending stack, intelligent credit decisioning, business intelligence, digital identity verification, automated financial statement analysis, debt securitization, treasury management, trade finance, automated accounts receivable and payable, and software consulting.
Its clients include Yes Bank, Jio Financial Services, IndusInd Bank, Hero FinCorp, among others. In its annual report for the financial year 2023-24 (FY24), the startup said its strategic priorities for the next year include acquiring companies with complementary products in transaction banking and digital lending.
Veefin’s profit after tax increased by 49% to INR 5.63 crore in FY24 from INR 3.78 crore in the previous fiscal. Revenue from operations increased by 72% to INR 24.99 crore from INR 14.48 crore in FY23.
Veefin was listed on the BSE SME platform in July last year at a price of INR 82. Its shares ended Monday’s (September 16) trading session down 2.8% at INR 682.55.