Existing investors LGT Lightstone, Falcon Edge, A91 Partners and MAJ Invest also participated in the current round
Bengaluru, NFAPost: Aye Finance, India’s leading lender to the MSME Sector, announces Rs 210 Crores in Series E funding, led by CapitalG, Alphabet’s independent growth fund.
The round also includes participation from Aye’s existing investors LGT Lightstone, Falcon Edge Capital, A91 Partners and MAJ Invest. With this fresh investment Aye’s total equity funding since inception exceeds Rs 690 crores.
Aye Finance, set up in 2014, provides working capital and business development loans to companies in the MSME space. It uses statistical models and predictive analytics to determine risk profiles, even in the absence of formal credit histories or documentation.
This funding recognises the traction Aye Finance is seeing in the market as a disruptive micro enterprise lender. Since its inception in 2014, Aye has disbursed Rs 3,000 crores transforming the micro enterprise lending landscape and brought over two hundred thousand unorganized businesses into the formal lending ecosystem.
Despite the disruptions brought on by the onset of Covid-19 that adversely affected the MSME sector, Aye has shown improving operating ratios in the first quarter of FY20-21, on the back of its quality lending book.
Commenting on the latest fund raise, Aye Finance Managing Director Sanjay Sharma said closing a major funding round during these times of economic uncertainty reinforces the value that investors see in Aye Finance.
“Difficult times are a true test of a good lender and we have already started showing significant improvements in the customer repayments in the past months. Our loans are underwritten with cluster insights and this continues to assure good repayment behavior in our portfolio. Our deep connect with customers, our engaged team that rates us as a great place to work, our extensive presence on the field, supported with automation, is a huge differentiator that enables us to optimally restrict credit losses,” said Aye Finance Managing Director Sanjay Sharma.
Aye Finance Managing Director Sanjay Sharma said this equity investment will further add to liquidity that will enable us to emerge strong from the Covid crisis and continue to benefit millions of micro-enterprises across India.
“Aye Finance’s continued success is a testament to their industry leadership, their underwriting methodology, which combines an optimal mix of data science with physical presence in the field, and their ability to empower a huge, unaddressed market,” said
CapitalG Board member and Partner Sumiran Das, said the company is proud to support Sanjay Sharma and Aye Finance in their mission to expand access to credit to SMEs across India.
LGT Lightstone Aspada Managing Partner Kartik Srivatsa said the company first invested in Aye in 2016 and over the years seen them grow into a canonical institution with strong focus on impact and scalability.
“The relevance of Aye in the post-covid economy in serving the financing needs of micro businesses is significant and we are excited to invest further in the growth journey of Aye,” said LGT Lightstone Aspada Managing Partner Kartik Srivatsa.
Falcon Edge Capital Co-Founder and Partner Navroz D. Udwadia said their investment is focused on MSME and SME lending as a significant yet under-served financing opportunity with healthy unit economics and a large, fragmented addressable market.
“We are excited to continue to back Aye Finance on this next leg of growth as they bring credit to India’s under-served MSMEs via a thoughtful and risk adjusted cluster-based approach,” said Falcon Edge Capital Co-Founder and Partner Navroz D. Udwadia.
A91 Partners Partner Kaushik Anand commented the overwhelming response to the service of Aye Finance is encouraging and delighted to increase investment in the fintech startup.
“The company’s leadership has responded robustly to the challenges Covid has presented. What Aye Finance provides has never been more important to India’s micro enterprises and we are glad to hear customers echo that sentiment,” said A91 Partners Partner Kaushik Anand
Maj Invest Partner David Paradiso commented the company is excited to continue our support of Aye Finance and its management team.
“We are happy to contribute to the scaling up of the business to continue providing top quality products to our customers,” said Maj Invest Partner David Paradiso.
According to VCCEdge, the data research arm of Mosaic Digital, Aye Finance reported net sales of Rs 209.61 crore for the 2019 financial year, with profit-after-tax figures of Rs 25.08 crore for the same period. The fintech-focussed NBFC also counts among its investors institutions such as responsAbility, BlueOrchard and a leading Indian bank.
In January, the United States-based non-profit organisation Accion International sold its stake in Aye Finance to A91 Partners, the venture capital firm founded by former Sequoia Capital India executives Abhay Pandey, VT Bharadwaj, Gautam Mago and Kaushik Anand.
About Aye Finance
Incorporated in the year 2014, Aye Finance is India’s leading fintech lender providing business loans to the micro enterprise sector across India. Aye Finance is headquartered in Gurgaon and has branch presence in 18 states through its 173 offices. The lender provides mortgage, hypothecation and term loan services accessible to India’s thriving and underserved micro enterprises. Aye Finance distinguishes itself by utilizing technology in mitigating the challenges faced by MSMEs in securing loans.
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About CapitalG, Alphabet’s independent growth fund
CapitalG helps remarkable entrepreneurs accelerate the growth of their businesses. We partner with transformational companies as they navigate the challenges of scaling by connecting them to the latest technology and brightest minds at Alphabet. CapitalG is proud to have worked with many of the most consequential technology companies across the world, including Cuemath, Cardekho, Practo and Commonfloor in India.
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About LGT Lightstone Aspada
LGT Lightstone Aspada is the India focused impact investment platform of LGT Lightstone. LGT Lightstone is LGT Group’s impact investing initiative to build a global multi-billion dollar direct investing platform focused on scalable businesses that provide access to improved livelihoods, information and services for underserved consumers around the world and/or promote sustainable resource utilization.
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About Falcon Edge Capital
Falcon Edge Capital is an investment firm founded by Rick Gerson and Navroz Udwadia in 2011, with $3.7bn assets under management. We invest across both public equities and private equity investments across stages, sectors and geographies, with a strong focus on India. Our existing portfolio of 25 private companies in India includes Ola Cabs, JM Financial Credit Solutions, National Stock Exchange (NSE), DailyHunt, Mswipe, Aye Finance, OfBusiness, Stanza Living, Bounce, Dealshare, etc., and separately, we have been long-term shareholders in some of India’s leading public companies.
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About A91 Partners
A91 Partners is an investment firm focused on early growth investments in consumer, financial services, technology and healthcare sectors in India. We look to partner with entrepreneurs looking to build enduring businesses for tomorrow’s India. The first fund of $351M was raised in 2019 and the current portfolio includes GoDigit General Insurance, Aye Finance, Sugar Cosmetics, Hector Beverages, Pushp Spices and Atomberg Technologies.
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About MAJ Invest
Maj Invest is a Danish asset management company with about USD 11 billion under management, of which USD 1.0 billion are in private equity. Headquartered in Copenhagen, with representation in Lima, Mumbai, and London. Maj Invest manages assets for more than 100 institutional clients worldwide. The mutual fund “Investeringsforeningen Maj Invest” is rated as one of Europe’s best mutual funds by Morningstar. Maj Invest Financial Inclusion Fund II is one of 10 private equity funds under management, and builds on the private equity experience and investment process of Maj Invest. The fund is incorporated in Denmark and is licensed according to the Alternative Investment Fund Managers Directive (AIFM) in EU.
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