It’s a Big Deal - Episode 10 | 25 Sep

Welcome to another edition of It’s-a-Big-Deal, where we delve into the intricacies of significant private market transactions in India.

In this episode, we unfold the unprecedented merger between fintech startup Slice and North East Small Finance Bank, a move that reshapes the financial landscape of the country.

Watch this Episode 10 available on Linkedin and YouTube.

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About Slice

Slice, registered as GaragePreneurs Internet Private Limited in June 2015, has made waves by venturing into the world of banking through its merger with North East Small Finance Bank.

This youth-centric fintech startup provides loans up to ₹5 lakhs with flexible repayment options over 12 months. Noteworthy services include the Slice UPI and Slice card, adding versatility to its offerings.

Financial Performance

Analyzing Slice’s financials, in FY22, the company recorded an impressive total revenue of ₹283 cr, reflecting nearly a 300% growth from the previous year. However, the company reported a loss of ₹253 cr, marking an 86% increase from FY21.

Notably, Slice allocated around ₹98 cr towards employee wages and benefits, underlining its commitment to its workforce. Post-merger, all Slice employees are set to become part of North East Small Finance Bank.

North East Small Finance Bank

Turning our attention to the new entity, North East Small Finance Bank, we find consistent revenue exceeding ₹300 cr since FY2020.

However, a concerning trend emerges as their profit after tax (PAT) percentage has been on a decline. FY22 marked their first loss-making year with a deficit of ₹123 cr, followed by a more substantial loss of ₹213 cr in FY23, despite steady revenue.

Shareholding & Investment

A revelation surfaces when examining shareholding. Slice was already a shareholder in North East Small Finance Bank in April 2023. In September 2022, Slice made its first investment, acquiring a 0.25% stake at a valuation of ₹5.5 billion.

Two subsequent follow-on investments increased Slice’s stake to 10%, with the bank valued at ₹3.8 billion ($46.2 million) in the latest April 2023 transaction.

However, the trajectory changed when the Reserve Bank of India (RBI) issued a directive targeting non-bank prepaid payment instrument (PPI) issuers like Slice.

The directive prohibited Slice from loading its cards and wallets with credit lines, leading to significant repercussions for Slice’s business model and likely paving the way for this merger.

Conclusion

In conclusion, the merger between Slice and North East Small Finance Bank marks a pivotal moment in the Indian financial landscape.

This union has the potential to amalgamate the speed and convenience of payment apps with the security and trust associated with traditional banking institutions. As the merger unfolds, it will be intriguing to witness how this alliance shapes the future of financial services in India.

We hope you found this analysis insightful. Thank you for joining us on It’s-a-Big-Deal.

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Disclaimer: The content provided in this article is for educational and informational purposes only and does not constitute professional financial advice. The opinions expressed herein are those of the author and do not necessarily reflect the views of the company / organization.  

Please consult a qualified financial professional prior to making any financial decisions.