Aye Finance Debt Funding Spree: responsAbility Investments AG Adds Another $10 Mn

Aye Finance Debt Funding Spree: responsAbility Investments AG Adds Another $10 Mn

SUMMARY

Aye Finance has raised $10 Mn in debt from responsAbility Investments AG

Prior to this, the fintech lender has raised over INR 480 Cr in equity and appx INR 1100 Cr through a variety of debt instruments

The public deposit of NBFCs increased from $293.78 Mn in FY19 to $4.95 Bn (INR 319.05 Bn) in FY18

SME lending player Aye Finance has raised $10 Mn in debt funding from responsAbility Investments AG, a Swiss impact investor. The funding round came in soon after it raised $7.7 Mn (INR 55 Cr) from DCB Bank through a securitization deal.

Aye raised $5 Mn from responsAbility through NCDs and the balance $5 Mn has been issued from a securitization pool raised by responsAbility, which was arranged by J.P Morgan. Key investors in this transaction include the Overseas Private Investment Corporation (OPIC), the US government agency, providing the initial capital necessary to mobilize the private institutional investment in the deal, and Alecta, the fifth-largest occupational pension provider in Europe, and investing in the essential risk capital.

Aye will use these funds to grow its loan book and offer affordable and customized credit solutions to the credit-starved micro enterprises in India. As of July 2019, the company claims to have an AUM of INR 1150 Cr with 91000 active customer base.

Prior to this, the fintech lender has raised over INR 480 Cr in an equity round, and approximately INR 1100 Cr through a variety of debt funding rounds. Aye is equity funded by stellar names in the global financial and impact sectors- CapitalG, SAIF Partners, Falcon Edge, Accion, LGT & MAJ Invest.

The digital lending company, which is working with small merchants and MSMEs, had recently announced its expansion plans of adding 67 branches (57 of which are already operational) and increasing its presence to 171 branches in 18 states by end of September.

Founded in 2014 by Sanjay Sharma and Vikram Jetley, Aye Finance provides B2B financial services to small and micro enterprises across India. It has designed its underwriting methodology based on the combination of industry-cluster approach, behavioural scorecards as well as alternate data underwriting methods like the psychometric analysis. It also uses a cloud-based business process engine and variety of data models to maintain economies of scale of its small ticket size loans.

Further, its CSR interventions work towards building multi-dimensional entrepreneurial skills of micro business owners and equipping them with tools to adapt to the evolving business landscape. The company has also been able to pass the recent NBFC crisis after the IL&FS default crisis in October 2018.

Sanjay Sharma, MD and Founder of Aye Finance, said, “This latest fund raise from responsAbility, which comes within three months after we raised INR 234 Cr in Series D equity round, is a validation of the trust the investor community has in our model and in our ability to achieve our mission.”

The opportunity in the Indian SME lending market is huge. According to a May 2019 IBEF report, the public deposit of NBFCs increased from $293.78 Mn in FY19 to $4.95 Bn (INR 319.05 Bn) in FY18, registering a compound annual growth rate (CAGR) of 36.86%. Also, as Union finance minister Nirmala Sitharaman’s 2019 budget announced the issuance of INR 70K Cr to banks, it will further help recapitalise NBFCs.

However, analysts believe that NBFCs will continue to face a liquidity crunch. Thus, the small, regular funding support received by Aye Finance from its investors speaks for itself.

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Aye Finance Debt Funding Spree: responsAbility Investments AG Adds Another $10 Mn-Inc42 Media
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