Micro-lender Aye Finance sells part of loan portfolio to raise capital
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Gurgaon-based AYE Finance Pvt. Ltd, which lends to micro and small businesses, has raised funds by selling a part of its loan portfolio to Hinduja Leyland Finance Ltd.

However, the micro lender did not specify the exact amount raised through this transaction.

Aye Finance’s loans form part of the Rs 107-crore loan pool and is partially guaranteed by IFMR Capital. It has contributions from seven firms, the company said in its statement.

The eight non-banking financial companies contributing towards the loan amount come from diverse backgrounds, including micro-finance, small business loans and commercial vehicle loans, among others.

“We will be raising over Rs 300 crore to meet our disbursal target for this financial year. To ensure that we procure these funds at competitive rates, we will be diversifying our sources of funds,” said Sanjay Sharma, co-founder and managing director, Aye Finance.

“Pooling of loans is a very economical method of raising debt and these additional funds will allow us to offer financial products to the bottom of the pyramid businesses at affordable rates. This association with Hinduja Leyland Finance and IFMR is a very positive milestone for us and we look forward to strengthening this relationship further,” he added.

Recently, the non-banking financial company had raised $8 million (Rs 52 crore) from Swiss impact investment manager BlueOrchard. Aye Finance received the money through non-convertible debentures with a maturity of five years. In addition, it had also secured a credit line of Rs 20 crore from State Bank of India.

In November 2016, AYE Finance had closed its $10 million Series B funding round led by Zurich-based LGT Impact Ventures and existing investors SAIF Partners. Non-profit organisation Accion had also participated in the round.

In February 2015, SAIF Partners and Accion had co-invested an undisclosed sum in the firm and followed it up with a Rs 20-crore infusion in December 2015. In April 2014, early-stage impact investment firm Contrarian Drishti Partners, along with its founder Somak Ghosh, had also invested an undisclosed amount in the company.

AYE Finance was founded in 2014 by Sharma and Vikram Jetley, former executives at microfinance institution Ujjivan Financial Services. It provides working capital loans of Rs 50,000 to Rs 25 lakh to micro and small enterprises. The company has lent Rs 150 crore till date.

“We are raising money aggressively because the business is growing at a much faster rate. We have served 18,000 customers till date, and adding around 2,500 customers every month,” Sharma had told VCCircle in May this year.

He had also said that the company is looking to raise more money to meet its loan disbursement target, and is in advanced stages of talks with two global development finance institutions. “They have already done due diligence and offered us term sheets. We will probably raise $6-8 million through them within a month or two.”

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