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SAIF Partners-backed Aye Finance raises $10 mn in debt funding
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Non-banking finance company Aye Finance Pvt. Ltd said on Thursday it has raised $10 million (Rs 71 crore) in debt funding from Swiss asset manager responsAbility Investments AG and homegrown firm Northern Arc Capital.

Aye Finance will use the proceeds, raised through non-convertible debentures, to boost its loan growth, it said in a statement. This is the 12th such debt fundraising round by the Gurugram-based company.

“…despite the bearish sentiments in the market, we have continued to get support from the industry in our mission to transform micro enterprise lending in India, as we continue to demonstrate robust metrics on growth and quality,” said Aye Finance’s managing director Sanjay Sharma.

The lender, incorporated in 2014, focuses on micro, small and medium enterprises. It counts Google parent Alphabet Inc.’s growth equity fund CapitalG, SAIF Partners, Accion International and LGT Impact Ventures as its investors.

VCCircle reported in June 2018 that Aye Finance had raised Rs 147 crore ($21.5 million) in a Series C round of funding from CapitalG, SAIF and LGT to grow its business.

Since its inception, the company has raised a little over $100 million ($700-725 crore) through a combination of debt and equity infusion by SAIF, CapitalG, Accion and LGT.

Aye Finance provides working capital and business development loans using a cluster-based approach, supported by a proprietary underwriting methodology. It operates in 11 states and has 104 branches. It has disbursed over Rs 1,250 crore to more than 1 lakh customers, according to the company.

In November 2018, Aye Finance had raised  $10 million by issuing debentures to Switzerland-based impact investor BlueOrchard Finance – the second such transaction between BlueOrchard and Aye Finance in 2018. BlueOrchard had offered $4.6 million in debt in March last year.

An October report by ratings firm ICRA said Aye Finance identifies business clusters and performs preliminary market research to understand the dynamics of the cluster by interacting with buyers, suppliers and manufacturers. Once a cluster is selected, the company opens a branch and starts lending to that cluster.

Aye Finance was founded in 2014 by Sanjay Sharma and Vikram Jetley, both former executives at Ujjivan Financial Services, the holding firm for Ujjivan Small Finance Bank.

With the latest round of funding, Swiss-based responAbility – founded in 2003 – continues to grow on its $3 billion in assets under management invested in over 540 companies in 90 countries. The company offers debt and equity financing to firms in emerging economies besides investment solutions to private, institutional and public investors.

Northern Arc, formerly IFMR Capital Finance Ltd, provides debt for under-banked individuals and businesses in India. Since inception, Northern Arc has offered $8 billion in finance to over 150 partner institutions through 125 plus reputed domestic and global investors.

In fact, Northern Arc raised Rs 200 crore (about $28.5 million) in debt funding last month from Dutch development bank FMO.

In November, VCCircle reported that Northern Arc Capital was in discussions with several private equity firms and strategic investors for a potential funding round ahead of a planned initial public offering.

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