[Funding Alert] Satya MicroCapital raises Rs 50 Cr by issuing NCDs to Aviator Global and Northern Arc

Micro-finance startup Satya MicroCapital Limited on Thursday announced that it has raised Rs 50 crore in debt funding, by issuing non-convertible debentures (NCDs) to Mauritius-based Aviator Global Investment Fund, in a joint venture with Northern Arc Capital, for three years.

The startup will utilise the fresh funds to process lending to MSMEs in India, largely for income-generating activities undertaken by women borrowers.

In debt funding, a foreign portfolio investor (FPI) jointly invests with a domestic lender in tandem with the Reserve Bank of India's (RBI) requirement of an FPI investment not exceeding 50 percent in a corporate bond issuance.

Northern Arc Capital, a leading debt platform for non-banking finance companies, co-invested 50 percent in the issuance.

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Vivek Tiwari, MD and CEO, Satya MicroCapital said, 

"We have built a strong base of over 3 lakh clients in 10,000+ villages of 100+ districts in over 15 states across the country, having a portfolio of around Rs 750 crore in two and half years of our journey. The raised debt fund of Rs 50 crore, will help us scale up our operational base to new territories, while continuing to develop further innovative credit offerings and ensuring complete end-to-end digitally controlled business processes being deployed."

The timing of a foreign investor's participation couldn’t be more appropriate especially, when his startup is looking at its next round of growth, Tiwari added.

Recently, the startup raised an additional Rs 30 crore of foreign debt fund, managed by private banker responsAbility. The startup is reported to be the first micro-finance institution to have collected Rs 100 crore via digital payment.

Sameer AH, Founder of Vidura Capital, a BFSI-focused investment bank added, that easing the RBI norms has encouraged FPIs like Aviator to access the corporate debt market in India.

According to an Intellecap study, the market size for micro-finance in India translates to an annual credit demand of $5.7 to $19.1 billion, assuming loan sizes range between $100 and $250.

Satya MicroCapital, an NBFC-MFI offers collateral-free credit to micro enterprises on the basis of a strong credit assessment platform and a centralised approval system. The company has adopted a unique Limited Liability Group (LLG) model for extending loans and ensuring repayment. The model distributes the liability among each group member, which exists only up to 10 installments in bi-weekly collections.

Started in October 2016, Satya has since registered an Assets under Management (AUM) value of over Rs 300 crore, in less than two years. The startup launched its micro-finance operations from its Bulandshahar branch in Uttar Pradesh. Since then, it has set up 65 branches across 11 states - Assam, Bihar, Chhattisgarh, Haryana, Odisha, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and West Bengal.

(Edited by Suman Singh)

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