Mumbai-headquartered lendingtech firm U Gro Capital is raising INR 100 Cr ($14.11 Mn) from Flipkart cofounder Sachin Bansal and the Poonawala family.
The deal is reportedly set in two separate securitisation and bond deals. U Gro has done the first securitisation transaction with Poonawalla Finance, part of the Poonawalla family. Further, Sachin Bansal entered into a non-convertible debenture deal with U Gro.
An ET report said that the firm will use the funds to expand its businesses at a time when capital is scarce for the sector. U GRO Capital chairman and managing director Shachindra Nath said that the entry of high-profile investors will enable the firm to attract more capital in the future.
“These transactions demonstrate our ability to securitise our book at an early stage of our development and establish that besides conventional term–financing, we have the ability to raise resources from alternative channels as well,” Nath said.
U GRO Capital is a BSE-listed, technology-focused, small business lending platform. The company is focused on addressing the capital needs of small businesses operating in eight sectors by providing customised loan solutions. The eight sectors are healthcare, education, chemicals, food processing / FMCG, hospitality, electrical equipment and components, auto components, light engineering.
The company has disbursed INR 600 crore of debt to about 1,000 customers since January this year. The firm’s disbursals rose to INR 218 Cr in the first quarter of FY20 from INR 64 Cr in Q4 FY19, and ended the quarter with an annualised disbursal rate of INR 1,200 Cr.
Sachin Bansal’s Fintech Ambitions
Bansal marked a huge exit from Flipkart when the company was acquired by US retail giant Walmart in 2018. He raked up millions and will keep receiving till 2020. The earnings coupled with years of connections in the Indian startup ecosystem, Bansal has been proving beneficial to the Indian entrepreneurs with his investments and mentorship.
In February, Bansal was reported to be in talks with financial experts on the potential to launch a new venture in the fintech sector. He had also reportedly met Reserve Bank of India executives to figure out the eligibility requirements for starting a bank.
In September, Bansal announced that he has acquired Chaitanya Rural Intermediation Development Services Private Limited (CRIDS), a non-banking finance company (NBFC) and will be heading the organisation as its CEO.
Prior to this, on December 2018, Bansal along with his friend Ankit Agarwal registered BAC Acquisitions Pvt Ltd in Bengaluru with the vision of developing platforms that can optimise business automation and enable digitisation of processes across sectors.
The company had increased its authorised share capital to INR 7.5K Cr ($1.05 Bn) in January 2019, soon after which Bansal invested another $7 Mn (INR 50 Cr) in BAC Acquisitions.
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.
Between 2015 and Q1 2019, the total investment in Indian fintech startups was $7.62 Bn with a total deal count of 478. Out of the total funding, 25.49% ($1.94 Bn) was in lending tech startups.