AU Financiers, a Jaipur-based non banking finance corporation, is raising a total of Rs 55 crore in equity funding from two private equity players. International Finance Corporation (IFC), the private investment arm of the World Bank, is investing Rs 35 crore in the firm, while the remaining Rs 20 crore is coming from India Business Excellence Fund (IBEF), a private equity fund managed by Motilal Oswal Private Equity Advisors Private Ltd.
AU Financiers is an incubatee company of Motilal Oswal, which has invested in the firm in 2008, said a company statement. It offers loans to low income segments for buying commercial vehicles, multi-utility vehicles, tractors and three wheelers to rural people to run their livelihood.
The company plans to utilise the fund in expanding its business of loans against property, and small-ticket business loans for micro and small enterprises. The company believes the funding will help in scaling up its business and penetrate deeper into semi-urban and rural areas. It targets to reach more than 1.8 lakh small borrowers in the next five years.
AU Financiers operates as an extended arm of banks and plans to grow from a small base to meet the needs of those who find it challenging to access credit for business activities. “High costs make it difficult to reach this segment. With the funding of IFC and MOPE, we expect to realize significant potential in our outreach,” Sanjay Agarwal, managing director, AU Financiers, said in the statement.
Motilal Oswal has launched its $125-million India focused private equity fund — India Business Excellence Fund — in 2006. It invests in the range of $5-15 million in sectors including power, IT enabled services and financial services.
IFC has been investing actively in India. Last week, it has put in $10 million (around Rs 45 crore) in Azure Power India Pvt Ltd, a New Delhi-based solar energy service provider. It has also announced $5 million (around Rs 23 crore) in Suvidhaa Infoserve Pvt Ltd, an S-commerce company in Mumbai.