Exclusive: NBFC Finova Capital To Raise Around INR 260 Cr From Sequoia, Faering Capital

Jaipur-based Non-Banking Financial Company (NBFC) Finova Capital is raising around INR 260 Cr from existing investors Sequoia Capital India (SCI) Growth Investments and Faering Capital. 

According to filings with the Ministry of Corporate Affairs (MCA) accessed by Inc42, the company has received the approval from its Board of Directors to allot 10 equity shares at a face value of INR 10 per share and a premium of INR 732.81 per share and 29,18,637 Series C Cumulative Compulsorily Convertible Preference Shares (CCCPS) at a face value of INR 100 per share and a premium of INR 642.81 per share to SCI Growth Investments III, aggregating to a total amount of INR 216.8 Cr. 

The company has also received approval to allot 5,81,575 Series C CCCPS to two separate investment funds operated by Mumbai-based private equity firm Faering Capital India, aggregating to a total amount of around INR 43.19 Cr. 

The company is also raising around 9.74 Cr from its founders, Mohit and Sunit Sahney. 

Founded in 2015 by Mohit Sahney, Finova is an NBFC licensed by the Reserve Bank of India (RBI) and looks to provide loans to those in the financially excluded and unorganised MSME sector. The company provides loans to both urban and rural poor to meet their productive requirements in starting a new business or for growing an existing business.

Faering Capital was the lead investor in Finova’s $15 Mn (INR 109.96 Cr) worth Series B round of funding last year, in which Sequoia Capital India also participated. In 2018, Finova raised $6 Mn (INR 43.98 Cr) from Sequoia Capital India. 

Sequoia Capital has invested in multiple fintech startups, including payment gateways – Mobikwik and Citrus Payment, consumer lending startups such as MoneyTap and Capital Float, and a point of sales machine manufacturer Pine Labs.

A whopping 80% of the formal loans in India are accessed by just 24 Mn households falling under the elite and affluent income categories, whereas the other 124 Mn households, who earn an annual income of INR 1.4 Lakh to INR 4.5 Lakh, have only received 10% of the total credit from the formal market.

Lending Set For Boost In India

As per DataLabs by Inc42 estimates, the credit demand in India is projected to be worth $1.41 Tn by 2022. The estimated growth rate in credit demand is 3.73% between FY17 and FY22. However, the Covid-19 crisis is said to be an unprecedented boost to the lending space in India.

Paytm founder Vijay Shekhar Sharma, talking at the ‘Ask Me Anything’ webinar hosted by Inc42, highlighted that lending is one of the biggest opportunities which comes out of these times. “Companies that swing around to the opportunity of distributing unsecured loans and collecting them well, and underwriting them well will become the champions of tomorrow,” he added.