SUMMARY
Aye Finance signed a securitization deal with DCB Bank
Aye Finance has raised over INR 1100 Cr debt since inception
The company claims to have disbursed over INR 2000 Cr to over 125K micro-enterprises
Gurugram-based digital lending company Aye Finance has raised INR 55 Cr ($7.99 Mn) in debt funding from DCB Bank through a securitisation deal. The funding will be used to grow its loan book and offer affordable and customised credit solutions to the credit-starved micro and small enterprises in India. The deal was syndicated by Vivriti Capital.
Since inception, the company has raised over INR 480 Cr ($69.76 Mn) in equity and appx INR 1100 Cr ($159.88 Mn) debt. The company last announced series D funding round of $33.34 Mn led by New York-based investment firm Falcon Edge Capital. Existing investors CapitalG, LGT and MAJ Invest also participated in the round.
In 2014, Sanjay Sharma and Vikram Jetley founded Aye Finance to provide B2B financial services to small and micro enterprises across India. Aye Finance claims to use data science coupled with cluster-based underwriting model to keep its operating cost low, drive better underwriting and help with obstacles related to inadequate documentation for its customers.
The company uses various data science tools – psychometric profile tools, behaviour based statistical credit scores and constantly improving cluster insights to decide to lend to the small-scale enterprises. Aye also gains debt facility from institutions such as SBI, HDFC Bank, BlueOrchard, Triodos Investment, and Symbiotics.
The company claims to have disbursed over INR 2K Cr to over 125K under-served and under-banked grass root businesses. Its current Asset Under Management is INR 1200 Cr.
Gaurav Kumar, founder and MD of Vivriti Capital said, “The deal validates the fact that high quality originators across asset classes continue to have the backing of debt markets. The transaction was structured and executed on our online credit platform which continues to see steady increase in volumes.”
Aye Finance Funding: NBFC Loan Book Grows
Over the last five years, the NBFC lending book has grown at nearly 18% driven by a deep understanding of target customer segments, use of technology advances, lean cost structures and differentiated business models to reach credit-starved segments, according to global consultancy PricewaterhouseCoopers.
Although there are a lot of positives and potential for NBFCs, their lending habits has had left much to be desired with many going bust last year because of reckless credit expansion and now face a liquidity crunch due to external developments (IL&FS default) and as investors take a step back from the initial investment frenzy to measure their moves, especially with stock prices of the listed non-banks faring poorly.
However, Union finance minister Nirmala Sitharaman’s 2019 budget announced the issuance of INR 70K Cr to banks which will further help recapitalise NBFCs. The impetus to revive the NBFC sector in Union Budget 2019 emphasises the importance of this sector for the Indian economy and measures taken in this budget are expected to improve the situation. NBFC sector is pivotal in fulfilling the credit demand of the country. Credit provided by NBFCs drives growth in consumption and hence the GDP.
