[YS Exclusive] Fintech unicorn Slice to raise Rs 200 Cr via NCDs

Bengaluru-based fintech startup Slice is also looking to cancel an “unsubscribed” CCPS offered to existing investor Moore Strategic Ventures, which had subscribed to 60 out of 61 offered CCPSs.
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Fintech unicorn Slice has received shareholders' approval to raise Rs 200 crore by allotting Non-Convertible Debentures (NCDs). 

According to the Registrar of Companies (RoC) filings accessed by YourStory, the fintech startup, at an extra ordinary general meeting, took shareholders' approval to issue non-convertible debentures (NCDs), including market-linked debentures on a private placement basis up to Rs 200 crore. 

The proposed NCDs will be issued in one or more tranches, either at par, premium, or at a discount to face value and the issue price (including premium, if any) shall be decided by the company's board based on the interest rate/effective yield determined and market conditions prevailing at the time of the issue(s).

“To augment resources for on-lending by the company, repayment/refinance of existing debt, working capital requirement, purchase of assets, investments, general corporate purposes, etc., the company may invite subscription for NCDs to be issued by the company in one or more series/tranches on private placement basis,” the filing read.

Slice has also sought the board's approval to cancel an “unsubscribed” Compulsorily Convertible Preference Shares (CCPS) offered to existing investor Moore Strategic Ventures, which had subscribed to 60 out of 61 offered CCPS. 

Fuelling the UPI race

The news comes three weeks after the fintech startup raised $50 million as part of its Series C round from Tiger Global Management, Moore Strategic Ventures,  Insight Partners, and  GMO VenturePartners. The startup said it will use the capital to support its new UPI product expansion. To date, Slice has raised $270 million in total funding.  

Recently, the fintech unicorn rolled out its UPI payments product, shifting its focus from providing credit to offering overall payments, which puts it in competition with Paytm, PhonePe, Google Pay, and BHIM, among others.

Founded in 2016 by Rajan Bajaj, Slice offers credit and payment cards (in partnership with Visa and SBM Bank), targeting young consumers with limited to no credit history.

Yet to turn profitable, Slice claims to have five million registered users on its platform. It offers credit lines, starting from Rs 10,000 and going all the way up to Rs 10 lakh.  

According to its latest figures, Slice's losses jumped 394 percent to Rs 8.9 crore in FY21, while its revenue from operations grew around 18 percent to Rs 35.3 crore. Further, the fintech unicorn reported a 34 percent (Rs 47.8 crore) increase in its expenses.

The timing 

Slice is among the group of fintechs likely to be impacted by the Reserve Bank of India's (RBI) recent direction barring non-bank lenders from loading credit lines into prepaid payment instruments (PPIs), typically e-wallets. 

The move spells trouble for NBFC credit line-linked wallets and prepaid cards that allowed Buy Now, Pay Later (BNPL) features, including Slice, Uni Cards, LazyPay, PostPe, MobiKwik, Ola Postpaid, EarlySalary, and some neobanks. 

While using credit lines to top up prepaid cards is becoming a popular way for fintechs to operate in the BNPL segment, the RBI is not pleased with this arrangement and believes that PPIs cannot be used as a credit instrument. 

In April 2022, in a master direction on credit and debit cards, RBI said that for co-branded cards (like Slice), the role of the co-branding partner entity shall be limited to marketing and distribution of the cards. Additionally, the co-branding partner shall not have access to information relating to transactions undertaken through the card.

Meanwhile, some players, including EarlySalary, Jupiter, and OlaMoney, have put a halt to their prepaid services, while others are awaiting clarity over the issue and are in discussion with the central bank.

Edited by Suman Singh and Rajiv Bhuva