Infinity Fincorp Bags $230 Mn, Partners Group Acquires Majority Stake

SUMMARY

The funding round, which was a mix of primary and secondary transactions, was led by Partners Group, with participation from Jungle Ventures

While the round involved a primary infusion of $70 Mn, the secondary transaction saw Indium IV (Mauritius) Holdings sell its stake

Earlier this year, MSME-focussed Infinity raised $40 Mn in its Series A funding round in two tranches

Switzerland-based PE firm Partners Group has acquired a majority stake in MSME-focussed NBFC Infinity Fincorp by leading a $230 Mn (around INR 1,950 Cr) funding round, which was a mix of primary and secondary transactions.

The funding round also saw participation from Infinity’s existing investor Jungle Ventures.

While the round involved a primary infusion of $70 Mn (about INR 600 Cr), the remaining was a secondary transaction. Indium IV (Mauritius) Holdings Limited sold its stake under the secondary transaction.

Founded by Shrikant Ravalkar in 2016, Infinity received a nod from the RBI to function as an NBFC just a year after its inception. The company provides loans to MSMEs, primarily against property as a collateral. It currently operates across 7 states, including Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Telangana, Andhra Pradesh, and Tamil Nadu.

It provides loans to small business owners involved in sectors like agriculture and allied activities, trading, and manufacturing. It claims to have more than 30,000 customers.

The Mumbai-based NBFC will utilise the fresh capital to expand its branch network and invest in its tech stack to enhance customer onboarding and experience.

The development comes months after Infinity raised $40 Mn in its Series A funding round in two tranches. As a part of this round, Beams Fintech Fund joined the company’s cap table.

Commenting on the stake acquisition, Partners Group’s MD of private equity, Vageesh Gupta, said, “The MSME segment contributes a significant share of national GDP and we expect demand for credit will continue to rise. We believe non-bank lenders such as Infinity have advantages in catering to these enterprises due to their highly specialised operations that are better suited to providing customised solutions.”

Notably, Partners Group also held a stake in Indian housing finance company Aavas Financiers. Earlier this month, the PE firm exited Aavas Financiers, nearly 7 years after the lender went public, by selling its stake to CVC Capital Partners.

Despite its challenges, the MSME-focussed lending space in India continues to be an attractive proposition because of the huge market opportunity. An expert committee on MSMEs, constituted by the RBI in 2019, estimated the credit gap in the MSME sector to be in the range of INR 20 Lakh Cr to INR 25 Lakh Cr. As a result, investors continue to be bullish on the space.

Earlier this year, the RBI approved Temasek-owned Fullerton Financial Holdings’ majority stake acquisition in MSME-focussed lending tech startup Lendingkart.