SUMMARY
SFG Aims To Take Minority Stakes In Early Stage Ventures with Ticket Sizes of $1 Mn Or Less
Chennai’s Sundaram Finance Group (SFG) has made an equity investment in Delhi-based overseas education loan disbursement platform GyanDhan.
The online marketplace GyanDhan was founded by two IIT alumni, Jainesh Sinha and Ankit Mehra with an aim to help students fulfil their goals. The platform provides education loans for students aspiring to pursue studies abroad (the US being one focus market).
With the raised funds, GyanDhan further aims to invest in building data science capabilities in the education loans market.
GyanDhan uses advanced data analytics and a proprietary data set that – for example – predicts the likelihood of a student getting a sufficiently remunerative job after graduation to service the education loan. This allows tailor-made education loan offerings for customers. GyanDhan has already tied up with multiple partners on the funding side.
As claimed in an official statement, GyanDhan has already helped over 250 students get education loans of around $9.30 Mn (INR 60 Cr).
SFG is a leading player in retail finance with a presence in multiple facets of the financial services industry, including vehicle finance, home finance, mutual funds, general insurance and financial services distribution. The group has a pan-India presence with over 600 branches. As of March 31 2017, SFL Group reported consolidated revenues of $873 Mn (INR 5,633 Cr) and profits of $105 Mn (INR 683 Cr).
Lately, SFG has been actively pursuing initiatives in the areas of digital technology. As a part of this effort, the group has started engaging with startups in the areas of financial services and fintech.
As stated by TT Srinivasaraghavan, Managing Director, SFG the initiative aims to associate with firms where there is synergy with group strategy. Harsha Viji, Deputy Managing Director, SFG further added, “We are already engaging with multiple startups with various types of engagement models – operational, financing, and also equity investments where it makes sense.”
While there is no specific time-frame or corpus in mind, SFG is looking to make investments as opportunities arise. The investments will be minority stakes in early stage ventures with ticket sizes of $1 Mn or less, though larger investments will be made where warranted, according to an official statement shared by SFG.
SFG is also looking to co-invest with like-minded venture capitalists and angel investors in this space.
As per data available until June 2016, there has been seen a surge of 17.8% in the growth of Indian students going abroad. The bank’s reluctance and higher interest rates on disbursing education loans have helped the startups to carve out a new niche in this segment. Relying on their tech algorithms, these startups fearless when it comes to credit repayment. Other prime players presently working in the education loan segment are Credila from the HDFC and Avanse. Also, there are players like OpenTap, BankBazaar, and more which are helping students with loans to study abroad.
