Delhi-based non-banking financial company AYE Finance (AYE) has closed its Series B round of funding worth Rs 70 crore ($10.3 million) from LGT Impact Ventures and existing investors SAIF Partners and Accion, it said in a statement.
The company will use the capital to grow its outreach across the country with a target loan portfolio of more than Rs 2,000 crore over five years.
The two-year-old firm, founded by Sanjay Sharma and Vikram Jetley, provides working capital loans to underserved micro and small enterprises by using a proprietary underwriting methodology. It has an outstanding portfolio of more than Rs 80 crore. Its operations are spread across 31 branches in seven states, catering to more than 250,000 borrowers.
AYE lends to micro businesses in manufacturing, trading and service sectors which cannot access capital from mainstream financial institutions in India, as they lack documents and credit history. It uses an Industry Cluster Enablement (ICE) approach to gain insights and connections within specific manufacturing, trading and service industries (for instance, shoes, brass works and garments), enabling it to target, acquire and underwrite small-scale businesses within each cluster.
It accesses and evaluates borrowers and caters to the credit needs of more than 40 industry clusters across the country. The loans provided by AYE are in the range of Rs 50,000 to Rs 25 lakh. With a blend of brick and mortar operations and financial technologies to deliver a low-cost and high touch-point business, AYE has been able to reach 10,000 micro enterprises, it claims.
Vishal Sood, partner, SAIF Partners, said, “We believe that AYE Finance has developed the right set of capabilities to profitably serve the underserved space of MSME finance''. Its consistent performance is a testimony to its unique business model for sourcing and evaluating borrowers efficiently and delivering value to its MSME customers, he said.
Accion has provided capital and advisory services support to AYE since it made a seed stage investment in the firm through Accion Venture Lab. Vikas Raj, managing director at Accion Venture Lab, said, “AYE Finance is one of the most exciting companies in our portfolio of global investments that are focused on using innovative underwriting and acquisition methods to serve micro and small enterprises. Through its cluster-based process, technology and high quality team, AYE is benefitting the large number of micro and small enterprises that are the engine of growth for the Indian economy.”
LGT IV invests growth capital to companies that caters to underserved people with access to affordable products, services and livelihood opportunities. Headquartered in Zurich with local teams in Latin America, Africa, India, Southeast Asia, China, and the UK, LGT IV focuses on sectors such as education, health, agriculture, energy, information and communication technologies. To date, LGT IV has invested over $60 million in 17 companies across five regions.
With over $4 billion under management, SAIF Partners provides seed, early and growth stage capital for emerging companies in India and China. SAIF began partnering with entrepreneurs in India in 2002 and has backed over 40 companies since then, including MakeMyTrip, JustDial, PayTM, BookMyShow, and Urban Ladder. SAIF's financial services portfolio include businesses such as NSE, Edelweiss and KarurVysya Bank as well as tech-enabled ventures such as Capital Float.
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