India’s fintech sector saw investments worth $2 billion in the first half of 2021, almost matching the total investments garnered in 2020, according to KPMG.
Digital banking attracted most of the investments, KPMG said in a report on the global fintech sector. Fintech investments totalled $1.64 billion in the first half of 2020, and nearly $2.25 billion for the whole of last year.
Fintech companies that have raised large amounts of capital since January include credit card payments platform Cred ($215 million), payment gateway provider RazorPay ($160 million), digital consumer lender KreditBee ($153 million), business-to-business e-commerce platform OfBusiness ($110 million) and payments and lending platform BharatPe ($108 million).
KPMG said India’s unique model allows digital banks to primarily act as software-as-a-service (SaaS) providers with regulatory responsibility remaining with bank partners. “Early fintech leaders in India have continued to expand their business models into adjacencies in order to bring their customers more value such as payments players acquiring insuretechs,” it said.
Insuretech has also attracted investor attention in the past six months. Insurance platform Turtlemint raised capital from GCV Capital and Jungle Ventures; digital insurance platform Renewbuy raised capital from Apis Partners, and Digit Insurance raised capital from A91 Partners, TVS Capital and Faering Capital earlier this year.
Sanjay Doshi, partner and head of financial services advisory at KPMG in India, expects more exits in the fintech sector in India through initial public offerings (IPO) as well as via acquisitions. “On the M&A front, fintechs could be targeted by banks, larger fintechs or even a fintech services conglomerate. Over the next 12 months, we expect leading fintech unicorns trying to tap into the strong capital market by looking at an IPO. Banks are also keen to partner with fintechs,” he said. For instance, Blackstone-backed Fino Payments Bank has filed draft papers with the regulator to raise ₹1,300 crore via an IPO.
Globally, fintech investment rose from $87 billion in the second half of 2020 to $98 billion in the first half of 2021. Fintech deal volume hit a new record of 2,456 during the January-June period, KPMG said. Of this, venture capital firms pumped in more than $52 billion, while private equity firms contributed around $5 billion in investments to fintech in the period.
Cross-border M&A deal value also rose from $10.3 billion in all of 2020 to $27.7 billion in the first half alone, the report said. Going forward, the crypto ecosystem will see sustained interest in the second half of this calendar year, the consulting firm said.
The article was first published on livemint.com