M2P builds acquisition war chest with R850m funding from Helios and others

M2P Fintech is raising acquisition funds, founder and chief executive officer (CEO) Madhusudanan R. said after the software-as-a-service (SaaS) startup raised funds ₹850 crore in a funding round led by Helios Investment Partners, half of which will be used to acquire companies.

“We need to look at some markets where we may need to intervene to contribute faster. That could lead to more investment or cash deployment. I estimate that more than half of the money will go towards acquiring companies,” Madhusudanan told Mint.

The fundraising, a combination of primary and secondary share sales, currently values ​​the company at over ₹6,550 crore. Existing M2P investor Flourish Ventures also participated in the round.

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The Chennai-based company, which provides software services to banks, is looking for acquisition opportunities to expand its operations both in India and abroad, with a special focus on Africa.

Founded in 2014 by Muthukumar A., ​​Prabhu R., and Madhusudanan as an API (application programming interface) infrastructure company, M2P has evolved into a banking services company for banks, lenders, fintech, and consumer technology companies.

“In 2024, we generated close to 60% of our revenue from India and around 40% from the rest of the world. Over the next two to three years, we expect India to remain a key market, contributing significantly at around 40%,” Madhusudanan said.

He added that while international revenues are growing faster, India is a large market and will continue to be the company’s revenue leader.

Expansion Plans

The company is also considering strategic expansion into select countries in the Association of Southeast Asian Nations (ASEAN) and Middle East regions. M2P Fintech operates in over 30 markets in the Asia Pacific, Middle East and North Africa (MENA) and Oceania regions.

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M2P Fintech has raised nearly $200 million to date from investors including Tiger Global, Better Capital, and MUFG Innovation Partners, the venture capital arm of Mitsubishi UFJ Financial Group Inc (MUFG).

The company provides services across core banking systems; core lending solutions; BNPL (buy now, pay later); credit, debit and prepaid cards; UPI and advanced data capabilities, among others. With the new investment, M2P aims to expand its technology stack and introduce AI solutions.

M2P Fintech revenues grew to ₹440.7 crore in fiscal year 2023 from ₹194.74 crore in fiscal year 2022 and ₹41.89 crore in fiscal 2021. However, the company’s loss increased more than three times to ₹134.26 crore in fiscal year 2023 from ₹40.08 crore in fiscal 2022.

“In FY24, in the first two quarters, we lost money. In the next two quarters, we made money again. So, overall, FY24 is still a loss-making year, but FY25 is a period where we expect profitability, or at least an increase in cash profitability,” Madhusudanan said.

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