CRED acquires mutual fund start-up Kuvera, forays into wealth management
Kunal Shah-led CRED has acquired online financial planning and investment platform Kuvera in a cash and stock deal. The move marks CRED's foray into wealth management sector as it plans to use Kuvera's 300,000-strong investor community for cross-selling opportunities. It is expected to offer new products alongside payments, loans, and insurance. Shah acknowledged that Kuvera is a popular brand amongst financially savvy Indians and its products and vision are aligned with CRED's principle of long-term value creation.
Kuvera will continue to operate independently after acquisition
Kuvera, which manages over $1.4 billion in assets, offers a variety of financial products such as mutual funds, fixed deposits, systematic investment plans, international equities, pension funds, and digital gold. The platform will continue to operate independently after the acquisition, with its 50-member team joining CRED. Kuvera's co-founder Gaurav Rastogi said, "Together with CRED, we see an exciting opportunity to fast-track building new products and features for our community while also bringing a trusted wealth management solution to millions more."
How CRED's offerings will boost after Kuvera's acquisition
CRED currently provides personal loans, Buy-Now-Pay-Later services, P2P lending via LiquiLoans, UPI payments, and insurance. It accounts for 33% of all credit card payments in India by volume. With the acquisition of Kuvera, CRED will be able to offer direct mutual funds, financial planning tools, SIPs, and digital gold, among other services. It is yet to be seen how CRED monetizes on Kuvera's products as most of these products require minimal fees from customers.
Challenges faced by Kuvera
Despite its popularity among financially savvy Indians, Kuvera has faced challenges in generating profits, with its operating revenue dropping 69% in FY23. The company's accumulated losses amount to Rs. 93 crore, raising concerns about its ability to continue on the growth trajectory. Kuvera had also been eyeing entry into stock broking services through its subsidiary Arevuk Securities, but its application remains stuck with the Securities and Exchange Board of India (SEBI).
CRED's acquisition seeks to tap mutual fund market potential
The Indian mutual fund market is one of the largest and fastest-growing in the world, with assets under management (AUM) exceeding $575 billion, up over 20% from a year ago. However, this market is still vastly untapped as more than 90% of the population still does not invest in mutual funds and stocks, per Tech Crunch. This opens ups a host of opportunities for companies like CRED who are making inroads into the wealth management sector.
