31/03/2015 5:09 PM IST | Updated 15/07/2016 8:25 AM IST

Snapdeal's Acquisition Of RupeePower Shows Scale Of Its Ambition

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The website is displayed on an Apple Inc. Iphone in an arranged photograph in New Delhi, India, on Thursday, Aug. 21, 2014. India doesnt allow foreign-controlled companies to sell products online. Thats led local web retailers such as the local Snapdeal to a different model than the one pioneered by Amazon: they operate online marketplaces and local traders sell goods in a $3 billion e-commerce market. Photographer: Kuni Takahashi/Bloomberg via Getty Images

E-commerce player Snapdeal just did its most ambitious acquisition that will allow it to launch a financial services marketplace. It has acquired RupeePower, a facilitator of loans and credit cards.

Gurgaon-based Snapdeal did not disclose details of the deal. It said in a statement that it aims to provide $1 billion of loans in the next couple of years using RupeePower, for which it will work with financial institutions. This will help fill a gap in the Indian financial sector where the lending market is often fragmented and unorganised, particularly in rural areas.

RupeePower brings borrowers and lenders together on a digital platform for loans and credit cards. The service is free for customers and the company is paid by the lender — banks and other financial institutions — upon loan disbursal.

"Realizing the various difficulties that consumers face while deciding and purchasing financial products/services and the challenges that companies face whilst reaching out to the ‘right’ audience, we have brought RupeePower into our family, to help solve the distribution challenges of the financial services ecosystem and make it more inclusive," said Kunal Bahl, Co-Founder & CEO, Snapdeal in a statement.

Snapdeal's founders hope that financial institutions have a higher conversion rate of their pitches to buyers, particularly those buying expensive products like cars or real estate, two new areas that Snapdeal has ventured into. Now they will be able to purchase and get financing on the same site. Snapdeal will also expand RupeePower to expand into more areas of lending and offer exclusive offers on the e-commerce site.

This acquisition moves it a step ahead of competitors including Flipkart, which leads the Indian e-commerce market. Flipkart does not provide financing services for the products it sells.

Snapdeal has raised $1.1 billion in eight rounds of fundraising. Japanese telecommunications company Softbank invested $627 million in the last round.

For RupeePower, this deal brings more resources to expand. Founded in 2011, the company has disbursed Rs 1,500 crore worth of credit on its platform in the current fiscal.

“The share of digital origination of credit is poised to grow from today’s 7.5 percent to 40 percent over the next four years, in an Rs 400,000 crore ($67 billion) retail credit market growing at 20 percent annually. With this investment and by partnering with Snapdeal, we aim to become the #1 originator of financial products over the next couple of years," said Tejasvi Mohanram, Founder & CEO, RupeePower in a statement.