Fintech lender Capital Float on Monday said its existing investors Amazon.com, Ribbit Capital, SAIF Partners and Sequoia Capital have collectively invested $15 million in the company.
The lender plans to use the funds to bolster its capital base and expand its lending operations to small and medium enterprises (SMEs) and retail consumers. With the latest investment, Capital Float has so far raised equity capital worth $125 Million ( ₹800 crore). The company has also raised $300 Million ( ₹2,200 crore) in debt funding to date, the statement said.
The fund infusion comes at a time when the covid-19 outbreak has forced India to be in a lockdown, impacting the repayment capacity of small and medium businesses as well as that of individuals. In addition, the Reserve Bank of India (RBI) has announced that individuals can opt for a three-month moratorium on all term loans. This has put non-banking finance companies (NBFCs) in a tricky position because while they have to offer the moratorium to their customers, the NBFCs themselves are unlikely to get a similar moratorium from banks that have lent to these non-banks.
Capital Float has also been struggling with profitability issues. On 30 March, India Ratings & Research revised the outlook on Capital Float to negative.
“The outlook revision reflects CapFloat’s weaker-than-expected financial performance in 9MFY20, with the company reporting net losses of Rs107 crore…The outlook revision also factors in the uncertainty around the quantum of adverse impact on CapFloat’s asset quality and credit cost due to the nationwide lockdown imposed to arrest the contagion of covid-19,” India Ratings said.
Capital Float claims that its customer base is spread across 300 cities in the country and includes both SMEs and retail consumers.
“The latest funding round with the help of the existing partners has signalled strong support and trust in Capital Float’s vision of scaling up digital financial inclusion in India. At a time when the industry is faced with multiple challenges, we are grateful for this reinforcement and want to continue making lending effortless for SMEs and consumers across the nation. We’re eager to significantly increase our lending capacity once the lockdown is lifted to enable SME growth and consumer spending at scale” said Sashank Rishyasringa, co-founder of Capital Float.
