InCred Finance, a new-age lending arm of the InCred Group, has announced its acquisition of the gold loan division of TruCap Finance for approximately ₹330 crore. The transaction, structured as a slump sale, includes the transfer of the “Dhanvarsha” brand name and trademarks. The deal is expected to be finalized by April 30, 2025, pending necessary regulatory approvals.
With this acquisition, InCred Finance gains control over 115 gold loan branches, a customer base of over 40,000, more than 550 employees, and assets under management (AUM) worth over ₹650 crore. This strategic move enables InCred Finance to expand its secured lending offerings, strengthen its retail footprint, and fast-track its entry into the gold loan segment by 24-36 months.
On the other hand, TruCap Finance plans to utilize the sale proceeds to reduce its debt and focus more on MSME business loans and green energy financing. The sale is expected to improve TruCap’s capital efficiency and boost long-term profitability.
The deal also comes at a time when the Reserve Bank of India (RBI) is tightening regulations on unsecured lending, prompting many financial players to pivot toward secured loans. This acquisition positions InCred Finance strategically within the growing gold loan market, leveraging its existing expertise in risk management and technology.
1. InCred Finance: Business Model, Revenue Model, and Growth Strategy
1.1 Business Model
InCred Finance operates as a non-banking financial company (NBFC) under the InCred Group. It provides lending solutions across various segments, including:
- Personal Loans
- MSME Loans
- Education Loans
- Secured Lending (now expanding into Gold Loans)
With a technology-driven approach, InCred Finance focuses on risk management, customer-centric solutions, and financial inclusion. The company leverages data analytics and AI-driven underwriting to enhance its lending decisions.
1.2 Revenue Model
InCred Finance generates revenue through:
- Interest income from loans
- Processing fees on disbursed loans
- Late payment charges
- Portfolio management services
The company has consistently expanded its loan book while maintaining profitability. It reported an operating revenue of ₹1,270 crore in FY24, a significant jump from ₹864.6 crore in FY23. Net profit more than doubled to ₹316.3 crore in FY24 from ₹120.9 crore in the previous fiscal year.
1.3 Founders and Leadership
InCred Finance was founded in 2016 by Bhupinder Singh, a former Deutsche Bank executive with extensive experience in financial services. The company has since expanded rapidly and operates through three main verticals:
- InCred Finance (lending)
- InCred Capital (wealth & asset management)
- InCred Money (investment distribution platform)
The gold loan business at InCred Finance will be led by Saurabh Jhalaria, a founding team member who also heads MSME and Education Loans.
2. Details of the Acquisition Deal
2.1 Structure of the Deal
- InCred Finance is acquiring TruCap Finance’s gold loan business for approximately ₹330 crore.
- The transaction is a slump sale, meaning all assets, liabilities, and employees of the gold loan division will be transferred to InCred Finance.
- The “Dhanvarsha” brand name and trademarks will also be part of the deal.
2.2 Assets and Benefits to InCred Finance
- 115 Branches: Expanding InCred Finance’s footprint across India.
- Customer Base: Over 40,000 gold loan customers.
- Employees: More than 550 employees with expertise in gold loans.
- AUM Addition: More than ₹650 crore in additional loan assets.
- Market Acceleration: Speeds up InCred Finance’s entry into the gold loan business by 24-36 months.
3. Impact on TruCap Finance
TruCap Finance, a Mumbai-based NBFC specializing in MSME loans, electric vehicle financing, and gold loans, expects this sale to:
- Reduce debt: Improve capital efficiency.
- Enhance net worth: Strengthen financials for future growth.
- Focus on MSME & Green Energy Finance: Post-sale, TruCap will concentrate on MSME loans and green energy financing, where it has seen significant traction.
In Q3 FY25, TruCap Finance reported:
- Operating Revenue: ₹51.6 crore, a 30% YoY increase.
- Net Loss Reduction: From ₹2.85 crore in Q3 FY24 to ₹0.96 crore in Q3 FY25.
4. Industry Trends and Competitive Landscape
- Gold Loan Market Growth: India’s gold loan market is projected to grow at a CAGR of 13.4% between 2023-2028.
- RBI Regulations on Unsecured Lending: NBFCs are shifting focus to secured lending amid tighter regulations.
- Major Competitors: Muthoot Finance, Manappuram Finance, and IIFL Finance dominate the gold loan space.
- Tech-Driven Gold Loans: Digital lending and AI-driven risk assessment are reshaping the sector.
5. Learning for Startups and Entrepreneurs
- Diversification is Key: InCred Finance’s move into gold loans demonstrates the importance of a well-diversified portfolio.
- Strategic Acquisitions Accelerate Growth: Instead of building from scratch, acquiring an existing business can fast-track market entry.
- Adaptation to Regulatory Changes: InCred Finance’s pivot to secured lending aligns with RBI’s stricter regulations on unsecured loans.
- Leveraging Brand and Expertise: TruCap Finance’s exit from the gold loan segment allows it to focus on core strengths while InCred Finance gains an established operational network.
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