Jaipur-based non-banking financial company Finova Capital Pvt. Ltd has closed a $15 million (Rs 103 crore) Series B round from new investor Faering Capital and existing investor Sequoia Capital India.
Finova will use the funds to expand its presence and enable access to credit for the unbanked population, the lender said in a statement.
Sequoia had earlier invested about Rs 39 crore in two tranches as part of Finova’s Series A round, closed in March last year.
Finova, founded by Mohit Sahney and Sunita Sahney, provides business loans to what it calls the “missing middle” of the micro, small and medium enterprises segment in small towns and rural areas. It offers mid-ticket loans of Rs 5-6 lakh for up to seven years with customised terms.
It has disbursed Rs 250 crore in loans to 4,500 customers till date. It is operating out of 52 branches across Rajasthan, and plans to expand to more than 75 branches across Rajasthan, Delhi and Madhya Pradesh by the end of December.
The company analyses borrowers’ cash flows as opposed to formal documentation for credit assessment since the segment that it addresses rarely has formal documentation.
“We are at an important juncture as we continue to find innovative ways to provide the unbanked population access to business loans,” said Finova founder and CEO Mohit Sahney.
Ishaan Mittal, principal at Sequoia, said Finova has focused on deepening its presence across Rajasthan while also building a strong team that can scale the business in the coming years.
Unitus Capital acted as the exclusive financial transaction adviser to Finova while Vertices Partners, Trilegal and Themis Associates acted as legal advisers for the transaction.
Finova joins Aye Finance Pvt. Ltd, another non-bank lender which focusses on MSMEs, in raising funds this month. Aye Finance raised Rs 253 crore from hedge fund Falcon Edge, Google parent Alphabet Inc.’s CapitalG and other investors.