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Encourage Capital invests in Electronica Finance to fund solar financing biz
Photo Credit: VCCircle

New York-based Encourage Capital has invested over Rs 100 crore ($14 million) in Electronica Finance Ltd (EFL) to fund the Pune-based lender’s expansion into the rooftop solar financing business.

Encourage Capital said in a statement that the firm, through its fund Encourage Solar Finance LP, has picked up a minority stake in EFL by subscribing to compulsorily convertible preference shares (CCPS).

The announcement comes barely days after VCCircle first reported the impending investment last week.

Encourage Capital was formed through a combination of Wolfensohn Fund Management, founded by former World Bank President, James D. Wolfensohn, and EKO Asset Management.

Shilpa Pophale, managing director at Electronica Finance, said the incremental funds raised will enable the firm to cater to the MSME segment in a more vigorous way and will grow the business in machinery financing. It will also enable the company to foray into the new rooftop solar financing business for MSMEs.

The lender, formerly known as Electronica Leasing and Finance Ltd, is incorporated in 1990. It is a part of the SRP Electronica Group and a pioneer in the field of machine finance.

Ameya Bijoor, partner and co-head at climate Finance and Financial Inclusion, Encourage Capital, said EFL has a unique and scalable platform that supports MSMEs in financing their businesses, from energy-efficient equipment finance to industrial property loans to clean energy investments.

EFL focuses on assessment-based financing, through varied products like machine loans, business loans, secured loans for micro-enterprises. It has served over 7,500 customers.

The firm has a presence in 15 states through 55 branches and over 450 employees. As of September 30, 2019, the company’s assets under management (AUM) were close to Rs 1,350 crores.

Recently, it also entered into an agreement with a responsAbility-managed climate fund in April 2019 for issuance of $10 million in green Masala Bonds.

The investment banker for the transaction was Edelweiss Financial Services.

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