BharatPe to share equity worth $100 mn with merchants on its platform

The fintech unicorn said it is aiming for the merchant shareholding pool to be worth about $1 bn by the time it goes public

Fintech unicorn BharatPe said on Thursday that it is launching a merchant shareholding program (MSP) with an equity pool of up to $100 million for small business owners on its platform. 

This pool will be allotted over the course of four years to more than 75 lakh merchants on its platform currently and also those who join it in the future. The company said it is aiming for the MSP pool to be worth close to $1 billion by the time it goes public. BharatPe was valued at $2.85 billion when it last raised a funding round of $370 million in September.

Ashneer Grover, co-founder and managing director, BharatPe, said “We like to keep our ears close to the ground. While the startup community celebrates its coming-of-age with multi-billion-dollar IPOs, there is resentment brewing elsewhere. Millions of consumers and merchants are feeling left out of the digital / startup value creation in India.”

“The folks who contribute to user numbers and revenue of startups and therefore aid the valuation don't get any equity upside or even allocation in IPOs. We will change it at BharatPe by making our merchants part equity owners and giving them the IPO upside through the first of its kind program in the world," he added.

BharatPe plans to build a loan book of $5 billion in five years to serve credit needed by millions of small businesses in India. The Delhi-based firm is about to cross $14 billion in annualised total payment value and it is working to ramp up to about $30 billion in total payments volume by March 2023.

“Our plan is to build a lending book of about Rs 40,000 crore ($5 billion) in five years,” Suhail Sameer, chief executive officer of BharatPe, earlier told Business Standard in an interview. “Hopefully, a large part of this would be funded by our merchant and consumer network. We have heavy usage and investments by our merchants and consumers.”

BharatPe is focused on three segments: merchant lending, consumer business and the Unity Small Finance Bank, a joint venture with Centrum Group that would start operations soon.

The firm’s target segment includes about 65 million MSMEs (micro, small and medium enterprises) in India that employ some 80 million people. The firm is tapping on the opportunity to address the unmet credit gap of $1 trillion in MSMEs in India.

The company has facilitated loans to over 3 lakh merchants to date. It has facilitated over Rs 2,800 crore of loan disbursals. There has been a growth of 10X in the last fiscal. It does monthly disbursals of Rs 300 crore. By next year, the firm aims to disburse loans of $1 billion among merchants.