Indian fintech startup CRED has struck a deal to buy mutual fund and stock investment platform Kuvera as part of an expansion into wealth management.
The $6.4 billion Bengaluru-headquartered startup said it was attracted by Kuvera’s experience team and expertise in enabling customers to invest directly in mutual funds and stocks with advisory and tracking tools.
Kuvera, which manages asset of over $1.4 billion, serves over 300,000 customers and has become the home for many affluent individuals.
The average size of an SIP on Kuvera is more than 5,000 Indian rupees, or $60, more than twice as large the industry average. The total mutual investment of size of over $14,450 is more than 5 times on Kuvera than the industry average.
Kuvera will continue to operate as a standalone app, CRED said, adding that it will explore integrations in the future.
TechCrunch reported last year that CRED was in talks to acquire Kuvera. The deal involves both cash and stock, the firms said. They declined to share precisely how Kuvera was valued in the deal. Kuvera had raised about $10 million in private rounds prior to the acquisition. The U.S. asset manager giant Fidelity will become a shareholder of CRED following the acquisition.
“Excited to welcome Kuvera and their team into the high-trust CRED ecosystem,” CRED founder Kunal Shah said in a statement.
“Kuvera is extremely popular among financially savvy Indians; their products and vision are aligned with CRED’s principle of investing for long-term value creation rather than short-term entertainment. Look forward to working and sharing learnings with the Kuvera team in our mutual intent to enable financial progress.”
CRED’s interest in Kuvera comes at a time when the Indian fintech giant, which serves some of the country’s most affluent customers, is expanding its offerings. The eponymous app originally launched six years ago with the feature to help members pay their credit card bills on time. It has since added scores of features that incentivize good financial behavior and expanded to e-commerce and lending.
The startup has been eyeing broadening its wealth management offerings for some time. It held talks with Bengaluru-headquartered Smallcase in 2022, but the talks didn’t materialize into a deal. (CRED has made a series of investments in the past three years, acquiring stakes in LiquiLoans and CredAvenue, and buying HapPay.)
Mutual funds can be a lucrative category for CRED, which processes a third of all credit card payments in India by volume.
The Indian mutual fund market is one of the largest and fastest-growing in the world. According to the Association of Mutual Funds in India (AMFI), the assets under management (AUM) of the Indian mutual fund industry stands at more than $575 billion, up over 20% from a year ago.
India’s expanding middle class, benefiting from higher disposable incomes, is fueling the growth of the mutual fund industry. Rising financial literacy and a surge in digital apps have heightened awareness while historical returns have solidified their appeal among Indian investors. And the room for growth remains ever-so-large as the number of consumers in India who buy financial products is still tiny.
“At the end of 2022, less than 10% of households’ financial assets were in the form of equity and fund products. But this is changing given the growing popularity of systematic investment plans that sends funds from consumers regularly into mutual funds, the rising popularity of insurance products and the growing adoption of credit cards and other financial products,” HSBC wrote in a report.