[The F word] After raising $21.5M from CapitalG last month, Aye Finance now raises $10M in debt funding

Small business loan provider Aye Finance will use the funds to grow its lending portfolio and offer affordable business loans to more micro enterprises.

Gurgaon-based fintech lender Aye Finance has raised $10 million in debt funding from global impact investment managers Triple Jump BV and MicroVest Funds, through the issuance of Non-Convertible Debentures.

The news comes just a month after Aye Finance had announced raising Rs 147 crore ($21.5 million) as a part of its Series C equity investment from CapitalG (formerly Google Capital), with participation from existing investors SAIF Partners and LGT.

According to the statement, the company plans to use the funds to bolster its lending portfolio and offer affordable business loans to a larger number of micro enterprises in India. This transaction was syndicated and executed by Northern Arc Capital.

Till now, Aye Finance claims to have disbursed close to Rs 800 crores to over 65,000 customers.

Speaking on the debt fund raise, Sanjay Sharma, MD and Founder of Aye Finance, said, “At Aye, we use various data science methods layered over traditional metrics of lending. These combined methods help us focus on the structural challenges of lending to micro businesses, who often do not maintain formal books of accounts, while reducing the possibility of credit losses in our portfolio. This has allowed us to cater to the credit needs of this underserved albeit creditworthy sector. And the confidence global investors like Triple Jump and MicroVest instil in us by offering us funds for onlending further strengthens our resolve to transform micro enterprise lending in India.”

Freek Kortekaas, Regional Manager Asia, Triple Jump, added, “Aye Finance has found an innovative approach to serve the so-called missing middle. These micro and small-sized businesses have outgrown microfinance and are often overlooked by banks. We are happy to support Aye Finance in its growth.”

Incorporated in 2014, Aye Finance is a digital NBFC lending to microenterprises, providing business loans to this underserved sector. Founded by Sanjay Sharma and Vikram Jetley, it is headquartered in Gurgaon, spreading its services across 72 branches and employing 1400 employees.

MicroVest’s Chief Investment Officer John Beckham said, “MicroVest’s mission closely aligns with Aye Finance’s commitment to empowering entrepreneurs, and we’re excited to partner with them to achieve this goal. We are confident in Aye Finance’s management team’s ability to continue scaling the organisation, which will enable the firm to serve even more small businesses in India.”

Microvest has disbursed over $1 billion to more than 200 financial institutions in over 60 countries. As of March 2018, MicroVest manages $385 million across all its funds.

Heightened interest

SME lending has been attracting a lot of investor interest this year.

SME lending platform LendingKart, in January this year, announced closing of their $87 million Series C round, one of the largest in the SME lending space, led by Singapore’s Fullerton Financial Holdings Pte Ltd, a subsidiary of Temasek Holdings.

Digital lender Capital Float has raised $22 million in equity funding from ecommerce behemoth Amazon Inc. The investment also marked the close of Capital Float's Series C round, taking the total fund raise to $67 million.

Earlier this month, technology-based SME lending platform OfBusiness announced that it has raised Rs 200 crore in Series C financing led by Creation Investments and Falcon Edge with existing investors Matrix Partners and Zodius Capital participating in the round. This took to the total fund raise by the OfBusiness team to Rs 500 crore, till date.

Just today, Mumbai-based specialised debt financing non-banking finance firm BlackSoil Capital raised $17 million (Rs 115 crore) from existing investors, including All Cargo Logistics Chairman Shashi Kiran Reddy. BlackSoil provides customised innovative debt solutions to diverse segments such as real estate, promoters of unlisted growth companies, and established institutional investors.