Amritsar, NFA Post: Finova Capital, a non-bank lender to unorganised sector businesses, has raised 260 crore rupees from Sequoia Capital and private equity firm Faering Capital.
Sequoia Capital has invested 216 crore, while Faering Capital has infused 44 crore rupees in this round.
Sequoia and Faering are already investors in the lending firm that lends against mortgages to customers in Rajasthan, Madhya Pradesh and Delhi through nearly 100 of its branches.
Jaipur-based Finova Capital lends to micro entrepreneurs and semi-skilled professionals, who typically have limited access to credit from formal financing institutions.
The company offers loans of around 3-5 lakh rupees for up to seven years at 21% to 25% annual interest rate.
The company, founded in 2016, has about 460 crore rupees of assets under management, and has a net worth of 440 crore rupees.
The company has raised a total of $56 million in equity since 2017. Finova Capital is also present in parts of Uttar Pradesh, adjacent to Delhi, and plans to expand in Haryana, too.
According to reports, apart from equity expansion, Finova has borrowed 130 crore rupees from several sources including Bank of Baroda, State Bank of India, and Bandhan Bank to expand its business.
“There is a demand from small entrepreneurs as they are trying to rebuild their businesses after the initial impact of the pandemic. At the same time, a lot of NBFCs have stopped funding because of liquidity issues creating a vacuum in the market,” Finova Capital Managing Director Mohit Sahney told Economic Times.
Principal at Sequoia Capital India LLP, Ishaan Mittal said that the current credit gap for MSMEs in India is estimated at $380 billion.
We are happy to help Finova raise capital in these difficult times. It attests to the strength of its business,” said Amit Jhanvar, director at Unitus Capital.
Sahney said that the fresh equity infusion will handle its business plans for the next two years.