This article was published on April 30, 2025, at 2:06 p.m. on the ChosunBiz MoneyMove site.
The small loan service company BalanceHero, which has captured the Indian market, is aiming for an initial public offering (IPO) in the second half of the year. The key issue is whether it can be recognized as not being a lending company.
According to the financial investment industry on the 30th, BalanceHero stated that in a briefing for major shareholders last month regarding its listing push, it would emphasize its growth achieved through small loan services instead of presenting itself as a "fintech-based comprehensive financial platform."
A source in the securities industry noted, "The term 'platform' is now considered a tarnished term due to its past use primarily by e-commerce companies seeking listings, and BalanceHero has chosen to adopt it."
The emphasis on BalanceHero’s platform is seen as a desperate measure because listing as a lending company is not possible. This is due to a ruling from the Financial Supervisory Service in 2009 that indicated that listing for lending companies conflicts with banking laws, leading to the failed public offerings of lending companies like Rush & Cash.
Article 2 of the Banking Act stipulates that 'banking' is defined as the business of receiving deposits or issuing securities or other debt instruments to raise funds from unspecified individuals for the purpose of lending. The Financial Supervisory Service believes that a lender without a banking license cannot raise funds through listing.
BalanceHero could potentially be classified as a lending company. Although it is registered as a domestic fintech software development startup established in 2014, its core business revolves around small loan services in the Indian market. Last year, most of its revenue of 144.2 billion won came from its small loan operations in India.
BalanceHero hit a home run by launching the 'TrueBalance' application, which informs users of prepaid mobile phone balances, along with a smartphone-based small short-term loan service. The company secured 100 million users by providing loans of about 200,000 won for 3 to 6 months to the Indian middle class, who have difficulty obtaining bank loans.
BalanceHero conducts its own credit evaluations and implements loans by utilizing an artificial intelligence (AI)-based Alternative Credit Scoring (ACS) system that leverages data such as mobile app usage records and location information. The loan default rate is approximately 7.1%, and the company reported a revenue of 144.2 billion won last year, with an operating profit of 35.5 billion won.
The company plans to highlight that it supplies ACS to Indian financial companies during this listing process. In addition to executing its own loans, it is engaged in a platform business that supplies ACS to Indian financial firms and receives commissions. Last year's revenue from the platform business accounted for 32% of its total revenue.
The plan is to expand TrueBalance itself from a small loan service into a financial platform. This includes adding investment products and bike insurance targeting the middle class, as well as planning to launch a loan product comparison service instead of executing loans directly within TrueBalance.
A source in the securities industry said, "Fortunately, BalanceHero is not operating as a lending company in South Korea, but rather providing small loan services through its Indian corporation in accordance with local financial regulations (Fintech, NBFC, etc.). However, it is uncertain how regulatory authorities will interpret this."
BalanceHero has begun preparing for the listing by transitioning its financial statements to the Korean International Financial Reporting Standards (K-IFRS). The due diligence for its Indian corporation has been completed, and it is expected to submit an application for preliminary listing review within the year. Mirae Asset Securities and Hana Securities are to act as the underwriters for the listing.
Meanwhile, BalanceHero noted, "BalanceHero is classified as a software development supplier and operates as a platform provider," adding that "it is currently growing into a microfinance platform company for developing countries based on the technology and data accumulated in the Indian market."