Amazon to acquire digital lender Axio (Capital Float)

Amazon to acquire digital lender Axio (Capital Float)

17 Jan 2025, 02:22 AM

Once the acquisition receives regulatory approval, it will make Amazon the first big tech company in India to gain access to an NBFC license through Axio.

Arti Singh

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Amazon is all set to acquire Bengaluru-based fintech company Axio (previously known as Capital Float), which operates as a non-banking financial company (NBFC).

The deal -- which awaits regulatory approvals -- is valued at close to $150 million.

"In December, after successful completion of due diligence, we signed an agreement with Amazon for a proposed acquisition of axio," axio said in a blog post.

Once the acquisition receives regulatory approval, it will make Amazon the first big tech company in India to gain access to an NBFC license through Axio.

The e-commerce giant, which first invested $22 million in Axio in 2018 at $350 million valuation, also invested $20 million through Amazon Sambhav Venture Fund last year. This development was exclusively reported by The Head and Tale.

Axio, which operates as a non-banking financial company (NBFC), was founded in 2013 by Gaurav Hinduja and Sashank Rishyasringa. The company initially focused on providing loans to small and medium-sized enterprises (SMEs). However, it shifted its strategy to consumer lending during the COVID-19 pandemic, with a significant focus on the rapidly growing buy now, pay later (BNPL) segment.

Last year, we exclusively reported that the partnership with Amazon has become a major driver of Axio's revenue; with 50-60% of its revenue coming through the e-commerce platform. Other than Amazon, Axio also works with Xiaomi, Razorpay, Policybazaar, Decathalon among others.

“Our approach to BNPL involves offering initial credit of Rs 10,000 to customers shopping on Amazon, gradually increasing the limit to Rs 45,000-50,000. After six months of successful repayments, these customers are offered personal loans ranging from Rs 1-1.5 lakh, with tenures of 24-36 months,” Gaurav Hinduja had earlier told The Head and Tale.

The fintech's monthly loan disbursements reached Rs 500-550 crore in 2023, with Rs 400 crore allocated to BNPL and Rs 100 crore to personal loans. The monthly disbursals some six-seven months ago stood at Rs 600-700 crore.

A key aspect of Axio's model, according to Hinduja, is its ability to operate with zero customer acquisition cost (CAC). The company benefits from its partnerships with merchants like Amazon, which cover the cost of acquiring customers.

“There is no CAC because we don’t pay for customer acquisition. The merchants pay us a subvention, and when we cross-sell, the CAC remains zero,” Hinduja had then said. This strategy has helped Axio maintain a low non-performing asset (NPA) ratio.

In addition to its BNPL offerings, Axio lends personal loans primarily through its own NBFC. On BNPL, the company also engages in co-lending arrangements with banks, typically using a 20:80 split where Axio funds 20% of the loan, and the partner bank covers the remaining 80%. While the personal loan is mostly through Axio’s own books.

The company reported Rs 428 crore in revenues during FY24, as compared to Rs 220 crore in FY23. And, the losses came down significantly to Rs 17 crore from Rs 138 crore reported during the previous year. Axio also counts Peak XV (earlier known as Sequoia Capital), Ribbit Capital, Creation Investments, Elevation Capital (earlier known as SAIF Partners) among its investors.

"The proposed acquisition aims to build on a successful six-year business and equity partnership centered around delivering accessible and affordable credit to customers across the country. We have achieved steady growth with robust asset quality, having served over 10 million customers till-date with an AUM of Rs 2200 crore and a 3% GNPA. Amazon has been an invaluable partner in this journey, and we have more to accomplish together," Axio said in its post.

The author is Founder and Editor of The Head and Tale. She can be reached at [email protected]
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