Avail Finance, which offers loans to blue-collar workers, has acquired YeLo, a neobank operating in the same segment, and is seeking regulatory nod to purchase non-bank lender Art Climate Finance (India) Pvt. Ltd, a person familiar with the development said.
The acquisitions is likely to help the fintech platform become a one-stop solution for the blue-collar segment, with lending, savings, insurance and investment solutions under one umbrella. “Avail Finance also plans to raise funds by the year end,” said the person aware of the developments, seeking anonymity.
YeLo, a Bengaluru-based startup co-founded by ex-Omidyar Network executive Nilesh Agarwal and Abhishek Challa, is focused on blue-collar workers earning ₹8,000- ₹30,000 per month and was operating in partnership with ICICI Bank. It had raised an undisclosed amount in its maiden round led by Matrix Partners, Omidyar Network India, Flourish VC and Better Capital in September 2019.
Avail Finance, founded by Ola Cabs founder Bhavish Aggarwal’s brother Ankush, was incorporated in 2016, with the two brothers as directors.
“The deal has not been formalized yet. However, Avail Finance has been paying salaries to YeLo employees and other costs in the form of some consulting fees, which is close to ₹40-50 lakh a month,” said the person cited earlier in the story.
This could be an investor-driven merger as Avail is also backed by Matrix Partners.
A message sent to Nilesh Agarwal and a mail sent to Ankush Aggarwal remained unanswered until press time.
However, a filing made by YeLo with the Registrar of Companies hints at its sale. According to the filing, Abraham Chacko, an independent director at YeLo, recently resigned from the board. “With reference to the captioned subject, in light of the potential sale of the company, I wish to resign from the post of directorship of 0.5Bn Finhealth Pvt. Ltd, with effect from 8 September 2021,” he wrote in his resignation letter. YeLo is a brand operated by 0.5Bn Finhealth Pvt Ltd.
In addition, YeLo’s Nilesh Agarwal has joined PhonePe as head of corporate development.
While the YeLo acquisition is at an advanced stage, the purchase of Delhi-based Art Climate Finance is awaiting regulatory approval. Currently, Avail runs a fintech platform and lends to its customers via partnerships with several non-banking financial companies (NBFCs). An NBFC licence will help Avail lend to customers directly.
“It is possible that this acquisition is happening through a separate entity and may not be taken on the books of Avail at all,” said the person cited earlier.
Art Climate Finance (India) is run by Rakhee Kapoor Tandon and Payal Sanghavi Bharat. Kapoor Tandon is the daughter of former Yes Bank managing director and CEO Rana Kapoor. For the year ended March 2020, the NBFC reported ₹23 lakh in revenue from operations and ₹14 lakh in net profit.
Queries sent to Art Climate were not answered until press time.
The Enforcement Directorate, which is probing a money laundering case at Yes Bank, had asked Kapoor Tandon to appear in person as part of the investigation. However, she has sought an exemption from the in-person requirement due to the pandemic.
She is a non-resident Indian based in London and a director of several companies, of which Art Climate Finance, Art Financial Services (India) Pvt. Ltd, ART Real Assets Finance (India) Pvt. Ltd holds NBFC licences.
Avail Finance had applied for an NBFC licence through its subsidiary, AF Capital Pvt. Ltd, in 2019.
However, the application was rejected by the Reserve Bank of India.
Source: Mint