Amazon to acquire fintech lending startup Axio in $200 million all-cash deal

Major in e-commerce Amazon is set to acquire Bangalore-based fintech Axio, valuing buy now, pay later (NBPL) at around $190 million to $200 million, three people in the know said. The deal, which awaits approval from the country’s banking regulator, is the biggest check Amazon has issued for a buyout in India and signals its intention to deepen its lending business.“In December, after completing due diligence, we signed an agreement with Amazon for a proposed acquisition of Axio. The transaction will now await the required regulatory approvals,” Axio said in the blog without disclosing details of the transaction. Axios manages the BNPL platform for Amazon as an exclusive partner.

The BNPL platform, which was at its peak valued at around $350 million in 2019, has since seen its valuation erode after suffering defaults in its edtech portfolio led by Byju’s a few years ago.

The digital lending space is consolidating amid the Reserve Bank of India’s regulatory crackdown on unsecured lending. In 2023, ZestMoney, one of the country’s largest BNPL players, closed its doors even as other consumer lending startups shifted to longer-term products. MyShubhLoans, a consumer lending platform, has been acquired by listed NBFC Ugro Capitalwhile Lendingkart sold a majority stake to existing investor Temasek-backed
Fullerton. Since its inception, Axio has been backed by Lightrock India, Peak XV Partners (formerly Sequoia Capital India) and Ribbit Capital. It raised $137 million in equity and $671 million in debt. In August last year, she received $20 million from Amazon. Smbhav Venture Capital Fund.

According to documents filed with credit rating agency Crisil, Lightrock held 21% of Axios, while Ribbit Capital held 17.6%. Amazon has a 17% stake. Among its first investors, Peak XV Partners currently owns 9% of the company.

Axio has approximately 10 million customers and $1 billion in annualized loan disbursements. The platform has a non-bank finance company licensed under Cap Float Financial Services. It offers consumer and pay later loans through its books and partner lenders.

Amazon and fintech

The deal is significant because if the RBI approves the transaction, Amazon will have access to an NBFC license.

With a prepaid payment instrument (PPI) license and as an insurance distributor, the acquisition of Axio will further amplify its fintech play in India.

Amazon’s other fintech bets in India include stakes in new-age insurer Acko, merchant payments startup Tonetag, lending marketplace BankBazaar and wealth management technology company Smallcase.

By focusing solely on customers coming from Amazon’s e-commerce platform, Axio has kept gross bad debt under control over the past two years.

It has built an AUM (assets under management) of Rs 2,200 crore with 3% gross bad loans. The startup closed FY2024 with a net loss of Rs 18 crore and total revenue of Rs 384 crore. In its credit note cited above, Crisil said the company reported an operating profit of Rs 81 crore in FY2024, but was in loss due to provisions for loans not repaid on time .

Although Axio did not share details about the future of the company, it did say that after the acquisition, the company would build on its existing business of providing credit to consumers across the country.