SUMMARY
Out of the INR 300 Cr fund, FMO invested INR 160 Cr
NeoGrowth will use the fresh investment to expand in new markets, strengthen presence in existing markets and develop its digitally enabled products
The funding has come a month after NeoGrowth bagged $20 Mn from the US-based financial institution Development Finance Corporation (DFC)
RBI-registered non-banking financial company (NBFC) NeoGrowth has secured INR 300 Cr as equity investment from the Dutch entrepreneurial development bank FMO and existing investors.
Of this, FMO invested INR 160 Cr in NeoGrowth’s equity funding round.
NeoGrowth will use the fresh investment to expand in new markets, strengthen presence in existing markets and develop its digitally enabled products.
The investment has come a month after NeoGrowth bagged $20 Mn from the US-based financial institution Development Finance Corporation (DFC).
Founded in 2013 by Dhruv Khaitan and Piyush Khaitan, the NBFC offers customised credit to small and medium-sized businesses. It claims to manage INR1600 Cr assets under management (AUM).
The NBFC uses data science and technology to offer loans to MSMEs across 25+ states in India. It has disbursed over 1 Bn loans to more than 1,50,000 businesses to date, said the company.
“NeoGrowth has been a debt client of FMO’s since 2017, and with FMO’s ability to provide funding across the capital structure, we are happy to further strengthen our support as a shareholder,” said Peter Maila, co-chief investment officer of FMO.
It has raised a total of $142.8 Mn funding to date, according to Crunchbase. Its cap table includes Omidyar Network, Lightrock, Khosla Impact, Quona Capital, IIFL Seed Ventures Fund, WestBridge, FMO, and Leapfrog Investments, among others.
“We believe that this fresh funding from FMO will enable us to accelerate our growth by leveraging our robust business model. We are confident that we will enable more small business owners – that have historically been denied formal credit to fuel their growth aspirations with our financially inclusive lending solutions,” said Arun Nayyar, managing director and CEO of NeoGrowth.
In India, Hero Fincorp Ltd, IGH Holdings and Tata Capital are some NBFCs operating in the country.
According to the Reserve Bank of India’s data, as of January 2022, a total of 9,495 registered NBFCs are operating in the country.
Major Developments In NBFC Space
This month onward, the RBI’s digital lending guidelines will be implemented in the country. The above guidelines preserve consumers from paying exorbitant interest rates to digital lenders and also avert unethical loan recovery activities practised by online lenders.
In November, the central bank was reported to be reluctant to grant NBFC licenses to fintech players. Ownership of fintech startups, capital inflows, and steep high interest charged by these companies were some issues concerning the RBI.
Notably, PhonePe, Razorpay, BharatPe, OkCredit, and Niyo are some of the fintech startups, whose NBFC licences were refused by the central bank.
Before that, microlending startup ftcash received NBFC licence from the RBI and thus, planned to disburse loans worth INR 100 Cr in the financial year 2023.
