Contrarian Drishti strikes debut investment with MSME-focused NBFC Aye Finance

Early stage impact investment firm Contrarian Drishti Partners, along with its founder Somak Ghosh, has invested an undisclosed amount in Delhi-based non-banking finance company (NBFC) Aye Finance. They have together picked a 30 per cent stake.

Aye Finance offers loans to micro enterprises with investments in plants and machinery of less than Rs 25 lakh and services enterprises with investments not exceeding Rs 10 lakh.

It was founded by two former executives of microfinance institution Ujjivan Financial Services—Sanjay Sharma and Vikram Jetley. Prior to this, Sharma was COO of Ujjivan while Jetley was responsible for leading the microlender’s business in the north region and individual lending across India. Sharma is an alumnus of IIT Bombay and IIM Bangalore, while Jetley is a management graduate from FORE School of Management, Delhi.

“Our customer base will comprise enterprises with annual turnover of Rs 10 lakh to Rs 1 crore, and we will help these small entrepreneurs meet working capital and capex requirements as they look to grow their businesses,” said Sanjay Sharma, CEO of Aye Finance.

“Access to formal finance and networks is vital for the growth of India’s micro and small enterprises and despite RBI’s push for banks to lend to this segment, there is a huge gap,” according to Somak Ghosh, managing partner at Contrarian Drishti Partners, who will join the board of Aye Finance post this investment.

Ghosh had launched Contrarian Drishti Partners and floated its first fund christened Contrarian Vriddhi Fund I after quitting financial services firm Motilal Oswal’s private equity arm. The new impact investment firm is awaiting SEBI nod for registering itself as an alternative investment fund which would also allow it to start fundraising.

In the meantime, Ghosh has put his own personal money into the fund. The latest deal involves commitment to invest through personal investment from Ghosh besides the corpus contributed by him to the fund.

It was initially targeting a VC fund with a corpus of $50 million to invest in Series A round to back companies addressing issues of affordability and accessibility in healthcare, education, livelihood generation, food & agri business and energy/utilities access.

As first reported by VCCircle, it had earlier cut the size of the fund to Rs 60 crore or around $10 million, including Rs 30 crore as a green-shoe option. It had also changed its investment strategy and will now invest at an angel funding stage which means smaller quantum.

It is looking to wrap up the fundraising process by the end of the year.

The NBFC space has witnessed a spate of transactions across stages. Most recently, LeapFrog invested $29 million in Chennai-based NBFC IFMR Capital; WestBridge Capital bought into public listed NBFC Cholamandalam and Mumbai-based NBFC NeoGrowth Credit raised $1.6 million from Aspada.

(Edited by Joby Puthuparampil Johnson)

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