The Indian arm of SBM Bank, one of the banks that has aggressively partnered with fintech startups in the South Asian market, is in talks with investors to raise capital and present its vision to become one of the top providers of banking as a service in the country, according to a source familiar with the matter.
The Indian arm is in advanced stages of deliberations to raise between $50 million and $75 million against a pre-money valuation of around $200 million, said the source, who asked for anonymity when discussing private matters. The round is not yet closed, so the terms of the deal could change, the source said.
The company sees its deep partnerships with fintech startups such as Bengaluru-based fintechs Razorpay and Slice as a key growth driver, according to an investor presentation seen by londonbusinessblog.com.
SBM Bank India declined to comment.
The bank has been actively attracting fintech startups as clients by offering them co-branded cards and powering their neobanks, while trying to differentiate itself from the big competitors who for years avoided going with the younger firms.
Banks have long been a favorite investment for private investors. The value of 100 rupees invested in HDFC and ICICI Bank stocks on Jan. 1, 2010 rose — including dividends — to more than 1,039 and 672 respectively late last month, according to an analysis by Bernstein.
Some venture investors have also shown a willingness to invest in banks in recent months – Accel and Quona, for example, recently backed Shivalik Small Finance Bank – but a growing number of other banks, including RBL and Federal Bank, have followed a similar strategy to SBM and many start-ups in the past two years.
Giant banks, including HDFC and ICICI, have also reversed course somewhat at the same time and are now less hostile to startups.
With mounting pressure and local FDI regulations, the valuation question may rest on investors confident that it is able to retain its corporate clients and their continued growth and that it is deepening its partnership with them to make additional offerings.
The Indian arm generated net sales of $62.7 million in the fiscal year ended March this year, according to the presentation.