Lending startup Aye Finance, on Thursday announced that it has raised $10 million via external commercial borrowings (ECBs) from its existing Swiss-based investor responsAbility Investments AG.
Zurich-headquartered responsAbility, an asset manager for impact investments in emerging economies, has backed Aye since 2017, with the latest deal being the fifth debt investment for the fintech lender.
Aye will be utilizing the additional funds to offer business loans to the excluded microenterprise sector to support their growth and enable their inclusion into the formal economy, the company said in a release.
Founded in 2014, Aye provides business loans to small and micro enterprises across India, leveraging its artificial intelligence (AI) and machine learning (ML) solutions in most of its critical business processes.
The lender claims to be using its proprietary cluster-based credit assessment methodology coupled with AI algorithms for risk selection even in the absence of traditional business documentation.
In the past few months, Aye appears to be on a fundraising spree. Early this month, the company raised about Rs 87 crore (about $10.7 million) in debt from Swiss impact investor BlueOrchard.
In the last three months, the company has raised Rs 550 crore in debt, with Rs 65 crore coming from Symbiotics, which is a market access platform for impact investing.
“We are currently witnessing a surge in credit applications from the microenterprise sector as businesses are being rebuilt post the disruptions caused by the pandemic. The support we are receiving from global impact leaders like responsAbility allows us to continue in our mission of transforming microenterprise lending in India by providing entrepreneurs customized business loans at affordable prices,” said Sanjay Sharma, managing director and founder of Aye Finance.
Aye Finance posted a profit before tax of Rs 27.8 crore in the fiscal first half ended September, Sharma said in a recent interaction with VCCircle. He said the company also recorded a net profit during the period.
In FY22, the company posted a net loss of Rs 67.4 crore as it chose to clean up bad loans accumulated due to the widespread business disruptions caused by the pandemic.
“Aye has fully expensed out all the covid-related impairments in FY22. Thus, we have commenced FY23 on a clean slate and every quarter this year has shown high profitability,” Sharma said.