Fintech unicorn Slice is currently in discussions for a $100 million equity funding round, exploring options with existing supporters while seeking an external lead investor. However, the talks are at an early stage and may take a few months to conclude, given the present funding landscape.
The intended investment of $100 million will be directed toward a new entity formed through the merger of Slice and North East Small Finance Bank. This initiative aims to maintain the capital adequacy ratio of the newly formed bank. One insider explained, “The funding is mainly required from the perspective of maintaining the newly formed bank’s capital adequacy ratio.”
Slice, backed by investors like Tiger Global, Gunosy Capital, and Axis Bank, intends to leverage this funding following its merger with the small finance bank. The valuation discussions, though, pose a point of deliberation. “The point of deliberation is the valuation at which the round will get closed. During the announcement of the merger, Slice was valued at around $1.5 billion,” a source revealed.
The company is aspiring to secure fresh funds at a higher valuation than its last equity round, citing its banking license as a significant factor. “Slice wants to raise the fresh funds at a higher valuation from its last equity round given its banking license,” mentioned another insider.
Slice is strategically aiming to construct a digital-first bank concentrated on retail consumers. The firm presently offers UPI payments, consumer credit, and prepaid banking accounts through its app, with plans to transition its prepaid account holders to full-service bank accounts once the new bank is established.
Furthermore, Slice intends to develop three primary credit products – personal loans, small-value merchant loans, and affordable home loans, all tailored toward retail customers. The company also aims to serve the migrant population of the northeastern states, enhancing financial inclusion in those regions.
This move by Slice is notable within the fintech industry, as acquiring a banking license has been a coveted achievement. Despite challenges, Slice’s merger with North East Small Finance Bank could pave the way for a unique digital-first banking model.
The development of this banking entity in the northeast is anticipated to require specialized approaches tailored to the region’s dynamics, fostering financial inclusion in a region with distinct characteristics. This endeavor could serve as an experimental milestone for both the RBI and the fintech ecosystem, channeling venture funds toward financial inclusion and digital banking initiatives.
