IIFL Fintech Fund Portfolio Delivers 9.5x Revenue Growth in Average Holding Span of 1.5 Years, 0% Deadpool, 40% EBITDA Positive
10.06.2024 - 09:32:31
- India's only early-stage fintech-focused fund backed by a financial services conglomerate – the IIFL Group, has delivered a stellar performance showcasing strong investment acumen of the fund management team during turbulent industry scenario. The fund is over two-year old and is invested across 14 portfolio companies. It has a 0% Deadpool (Deadpool means failed startups) till now and 40% of its portfolio is EBIDTA positive. The fund boasts of one exit which was made in less than 18 months delivering an 80% IRR. Fund's Portfolio Internal Rate of Return (IRR) stands at 24% and Total Value Paid-In (TVPI) of 1.35x.
Overall the portfolio companies have witnessed 100mn$ plus of follow-on funding post IIFL's investment. Revenue growth reported by the portfolio is 9.5x in an average holding span of 1.5 years. All of these portfolio companies have delivered 3-4x higher growth than their respective segments growth. Some of the early stage investments that the fund had identified have seen a 12x revenue growth in less than 2 years.
Fund's strategy is to focus on early stage Fintechs and SAAS platform players that have use cases in the financial services industry. Fintech growth in India is multi-decadal and is expected to be higher as there is a huge under-penetration seen across segments: domestic credit (3x gap vs global), Mutual fund AUM (4.6x gap vs global) and Insurance (~1.6x gap vs global).
Overall, fintech as a segment is expected to grow at 11.1x in the next 5-years versus a growth of 3x expected in Indian online retail and 5.8x expected in Indian consumer tech. Over the last 5 years, 30% of the total funding deals have happened in the Online and Retail space and only 17% of the total funding has happened in Fintech. This gives an immense opportunity to fintech focused funds.
Tailwinds for the fintech sector continue to remain strong with an increasing digital population. There are >800mn internet users, >400mn digital content users, >500mn new smartphone users and >300mn digital payment users. Digital Public Infra is ready and stable to support 10x growth in the sector. Aadhaar, UPI, Digi locker, Account aggregator are innovations that are at the forefront of enabling this growth.
Mehekka Oberoi, Fund Manager, IIFL Fintech Fund said, "Our fintech focused fund follows a collaborative approach. We just don’t invest capital, we partner with companies in their product development, business & GTM Strategies, talent hiring and financial discipline. This helps us identify the strength of the product early on and map the business potential that it has. This strategy has helped us pick winners across the fintech domain. Examples: Leegality- is the largest document infrastructure signing company in India, FinBox- fastest growing embedded finance player, Trendlyne-most used stock market analytics platform, Finvu- account aggregator with the highest market share”
She further added, “91% of the fund’s deals are proprietary in nature and follow a strong filtration criterion. Only ~1% of the deals reach the investment stage. For identified companies we remain partners with them from tech deployment to revenue acceleration stage (100crs ARR) and beyond."
Other investments done by the fund in the last one year: Riskcovry, Insurance Samadhan, Castler, EasyRewardz, Multipl, Finarkein Analytics, Xtracap Finance and Data Sutram.
Overall the portfolio companies have witnessed 100mn$ plus of follow-on funding post IIFL's investment. Revenue growth reported by the portfolio is 9.5x in an average holding span of 1.5 years. All of these portfolio companies have delivered 3-4x higher growth than their respective segments growth. Some of the early stage investments that the fund had identified have seen a 12x revenue growth in less than 2 years.
Fund's strategy is to focus on early stage Fintechs and SAAS platform players that have use cases in the financial services industry. Fintech growth in India is multi-decadal and is expected to be higher as there is a huge under-penetration seen across segments: domestic credit (3x gap vs global), Mutual fund AUM (4.6x gap vs global) and Insurance (~1.6x gap vs global).
Overall, fintech as a segment is expected to grow at 11.1x in the next 5-years versus a growth of 3x expected in Indian online retail and 5.8x expected in Indian consumer tech. Over the last 5 years, 30% of the total funding deals have happened in the Online and Retail space and only 17% of the total funding has happened in Fintech. This gives an immense opportunity to fintech focused funds.
Tailwinds for the fintech sector continue to remain strong with an increasing digital population. There are >800mn internet users, >400mn digital content users, >500mn new smartphone users and >300mn digital payment users. Digital Public Infra is ready and stable to support 10x growth in the sector. Aadhaar, UPI, Digi locker, Account aggregator are innovations that are at the forefront of enabling this growth.
Mehekka Oberoi, Fund Manager, IIFL Fintech Fund said, "Our fintech focused fund follows a collaborative approach. We just don’t invest capital, we partner with companies in their product development, business & GTM Strategies, talent hiring and financial discipline. This helps us identify the strength of the product early on and map the business potential that it has. This strategy has helped us pick winners across the fintech domain. Examples: Leegality- is the largest document infrastructure signing company in India, FinBox- fastest growing embedded finance player, Trendlyne-most used stock market analytics platform, Finvu- account aggregator with the highest market share”
She further added, “91% of the fund’s deals are proprietary in nature and follow a strong filtration criterion. Only ~1% of the deals reach the investment stage. For identified companies we remain partners with them from tech deployment to revenue acceleration stage (100crs ARR) and beyond."
Other investments done by the fund in the last one year: Riskcovry, Insurance Samadhan, Castler, EasyRewardz, Multipl, Finarkein Analytics, Xtracap Finance and Data Sutram.
