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Corporate Report

Published on: Sept. 21, 2023, 2:54 p.m.
Will it be advantage for Pepper in India?
  • Kulkarni: rapid growth

By S M Boothem with Akshaya M

The Pepper Group initiated its European operations in 2000. The company comprises two major divisions: Pepper Advantage and Pepper Money. Pepper Advantage, established in 2012, specialises in credit management, risk management, and credit investments, while Pepper Money primarily focuses on lending. The company maintains a global presence, with significant operations in Europe, Australia and Korea.

Pepper Advantage made its entry into the Indian market in 2019 with a primary focus on developing its credit investments business. The Indian operations revolve around three core areas: credit management, credit technologies, and credit investments.

In the credit technologies segment, the company aids lenders in evaluating and mitigating risk during the loan underwriting process. This includes identifying and preventing various types of fraud, such as document fraud, identity fraud, and financial fraud, all from the initial underwriting stage. Additionally, it provides credit intelligence services, including stress testing of existing loan portfolios.

By simulating various economic and environmental scenarios, the company assists clients in understanding how their loan portfolios would perform under different stress conditions. This valuable insight empowers lenders to make informed decisions and adapt their business strategies accordingly.

The other component of Pepper Advantage’s operations in India involves credit investments. This entails acquiring portfolios from different banks and non-banking financial companies (NBFCs). The company plans to initiate this aspect of its business next year, wherein it will invest funds to purchase such portfolios.

With its robust presence in global markets and a clientele that includes Bank of Cyprus, Goldman Sachs, Deutsche Bank, JP Morgan, and RBS Group, Pepper’s Indian arm has been strategically designed to tap into India’s growth potential.

Through its comprehensive range of credit-related services, the company aims to contribute to the Indian financial landscape by offering risk assessment, portfolio management insights, and credit investments. KKR holds the majority stake in the company at 67 per cent, with the remaining shares distributed among another founder and various senior global leaders, creating a closely held ownership structure.

On the upside

Mukund Kulkarni, CEO of Pepper Advantage, remarks: “Over the past year, our growth rate has been incredibly rapid, far surpassing our performance over the preceding 2 years. Comparing what we have accomplished in the past 12 months to what we achieved in that two-year span is quite remarkable. Moreover, our geographic reach has expanded significantly – we have successfully established operational hubs in Chennai, Bengaluru, Mumbai, Delhi, and Ahmedabad, with upcoming ones in Kolkata, Kochi, and Lucknow within this 12-month timeframe. During this period, we’ve onboarded close to 300 skilled professionals, and our client base now boasts 20 active banks and NBFCs utilising our services.” 

According to the RBI’s report, the gross NPA in the banking system amounts to around Rs7 lakh crores. These portfolios require diligent servicing, and a substantial portion of this task is outsourced. Currently, Pepper Advantage services only a fraction of this vast market, approximately one per cent, which equates to around Rs1,500 crore. Despite achieving a growth rate of 200 per cent in the past 12 months, there is an opportunity for exponential growth. Pepper’s ambitions are indeed grand, as they have set ambitious targets for expanding their AUM (Assets Under Management) and overall market presence.

  • Gemmell: improving data and technology

    Gemmell: improving data and technology

Discussing the entire process, Kulkarni states: “The Pepper Advantage goes beyond conventional practices, wherein our approach entails not only validating documents with relevant authorities but also meticulously scrutinising them for potential manipulation or fraudulent activity. This means that we assess whether the provided documents, such as Aadhaar cards, PAN cards, bank statements, or salary slips, are not only authentic but also devoid of any attempts at manipulation. Notably, this aspect of our service distinguishes us from other market players."

"From a risk assessment technology perspective, considering the organised sector in India, which includes banks, NBFCs, and microfinance companies, approximately 15 crore loan applications are processed annually. In contrast, the 14 clients currently utilising our services are processing 14 lakh loan applications annually through our portal. This comparison underscores the substantial growth potential we possess. Turning to credit investment, we have assessed numerous portfolios in India, with a primary focus on mortgage portfolios," says Kulkarni.

"To gauge the market, we have made strategic investments in two smaller portfolios and will assess the behaviour of these portfolios based on the evaluations over the next six months. Looking ahead, our plan involves expanding these investments into larger portfolios, with a particular focus on the retail and SME segments. This strategic progression aligns with our vision for comprehensive growth and market penetration,” adds he.

The number of clients is expected to grow further with the introduction of new offerings and the recent acquisition of, a Pune-based technology company. is already servicing around 14 lenders with their technology product. This strategic move is contributing to the overall growth of the company and is instrumental in the establishment of a global technology delivery hub in Pune. This hub will play a pivotal role in the company’s growth strategy. 

Fraser Gemmell, Chief Executive Officer of Pepper Advantage, commented on the acquisition, stating: “The acquisition of rapidly expands Pepper Advantage’s addressable market in India and represents an AI-driven credit management model we will soon be bringing to additional high-growth countries. It also enhances our suite of cutting-edge technology and allows us to add credit risk analysis to our broader platform, a growing priority in the market since the Reserve Bank of India highlighted rising instances of fraud in its most recent annual report. Our commitment to improving our data and technology capabilities is expanding Pepper Advantage’s client pool from traditional loan originators at financial institutions to include the fast-growing non-bank lending sector, which typically relies more on third-party tech providers that offer plug-and- play solutions.”

Expansion plans

“We are actively engaged in discussions with virtually every well-known bank in India. When we introduce ourselves as a corporate player poised to manage delinquent accounts, the response is overwhelmingly welcoming. There’s a palpable need for a corporate entity with a pan-India presence in this specific field. Currently, only a couple of players possess such a nationwide reach and corporate stature in the debt servicing domain. In the past twelve months alone, we have successfully onboarded six banks, and we are currently in discussions with an additional eight banks who are part of our upcoming pipeline,” explains Kulkarni.

“We are also exploring opportunities beyond the banking sector. A significant avenue that we are looking to tap into is the insurance industry. Our Risk Assessment product, with its capabilities for document assessment and fraud detection, holds relevance for insurance companies as well. We are actively adapting our product to cater to the needs of insurance companies, enabling them to conduct fraud assessments during both the sourcing and claims assessment processes. This expansion into the insurance sector presents an exciting new horizon for our services.”

  • The acquisition of rapidly expands Pepper Advantage’s addressable market in India

Pepper offers a comprehensive, all-in-one solution that eliminates the need for banks to engage with multiple vendors. By choosing Pepper, banks gain access to a pan-India reach, and complete lifecycle management. Clients appreciate the holistic nature of the solution, which addresses their pain points and provides a seamless experience. Unlike fragmented alternatives, where distinct players offer various solution components, Pepper Advantage provides an integrated end-to-end framework.

The technology centre plays a significant role in Pepper’s operations. It functions as a strategic hub that serves both local and global purposes. For example, in the credit market, the established European market operates differently from the Indian market. While its products are already operational in Europe, the technology centre in India assumes a crucial role. This is in addition to its existing technology hub in Spain, which caters to the European market. The Indian technology centre, however, is geared to serve the entire Asian market.

“At Pepper Advantage, we have a strong belief in the potential of the Indian story, particularly in the context of our sector. One compelling factor is our demographic advantage – a sizable and youthful population that is projected to persist for the next three decades. Furthermore, our economy is primarily consumption-driven rather than export-dependent. These two factors, coupled together, position India to outpace many other economies worldwide. Consequently, on the global stage, the focus on entering and establishing a presence in India is palpable. Companies are strategically positioning themselves to harness the anticipated surge in growth. Over the next 3-5 years, our aim is to secure a spot among the top three service providers,” says Kulkarni confidently. Pepper has a unique ‘advantage’ that positions it for expansion and growth in Indian markets.

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