Small business loans provider Aye Finance is looking to raise ₹ 250-300 crore ($33.9-40.7 million) in a Series D funding round from new overseas investors, a top company executive said.
The Gurugram-based non-banking financial company has initiated talks with two foreign investors to raise fresh capital at a valuation of ₹ 500 crore, Sanjay Sharma, managing director of Aye Finance, said over the phone, adding that existing investors are also expected to participate in the proposed round.
In June, Mint had reported that Aye Finance had raised its ₹ 145.2 crore Series C round from Capital G, the venture capital fund owned by Alphabet Inc.
Till date, it has raised about ₹ 242 crore in external funding.
“We thought we would look at raising money again in the next 18 months, but we are finding there is a lot of interest in the SME market still. The industry is beginning to realise that a pure fin-tech play without being on the field will not help,” said Sharma. “There is beginning of interest in the brick-and-mortar model, which uses a lot of data science techniques like Aye Finance does.”
Aye Finance counts LGT Impact Ventures, SAIF Partners and Accion International (a global non-profit) as its existing investors.
Founded in 2014 by Sharma and Vikram Jetley, Aye Finance is a non-banking financial company that provides mortgage, hypothecation, and term loan services to micro, small and medium enterprises (MSMEs). It has 103 branches in 11 states across India.
The company plans to use the money to raise its capital adequacy and lend more to small and medium enterprises.
“The usual segments where ML can be applied will be for identifying good customers, predicting the bounce rate and checking for repeat loans. An unexpected area would be making document pictures clicked on phones readable, which otherwise our loan officers would have to visit and check,” Sharma added.
The company focuses on solving funding-related problems of micro-enterprises that traditionally rely only on informal sources of financing such as local moneylenders and chit funds.
Till date, Aye Finance has disbursed loans worth ₹1,000 crore to 80,000 small and medium businesses and aims to lend ₹940 crore in FY19. It also claims to have around ₹670 crore in assets under management (AUM). It currently has bad debts of less than 2% of its loan book.
Recently, NBFCs have come under the RBI radar. The central bank is likely to tighten capital adequacy norms, related-party transactions and asset liability mismatches.
Sharma claims that Aye’s capital adequacy ratio is at 35%, well above the central bank’s mandate of 15%. “We have a good head room for growing our debt funds. We have over 22 debt fund providers. Among them are leading public sector and private sector banks and leading foreign development finance institutions,” he added. “We should not be impacted by the expected tightening by the RBI.”
Aye Finance had raised ₹68.7 crore in a debt financing round from global impact investment managers TripleJump BV and MicroVest Funds in July, Mint had reported. Since January, it has cumulatively raised ₹255 crore in debt.
Source: Mint