U Gro Capital Ltd, a technology-enabled lender to small businesses, has raised Rs 75 crore (about $10.56 million at current exchange rates) from Flipkart co-founder Sachin Bansal and Poonawalla Finance Pvt. Ltd, a part of the Cyrus Poonawalla Group.
The Mumbai-based company said in a statement that it has issued non-convertible debentures worth Rs 50 crore to Bansal. The NBFC raised the remaining from Poonawalla Finance through a securitisation deal, it added.
The firm said the investment was testament to its native underwriting platform, including its technology framework and corporate governance standards. It follows a three-pronged liability strategy of combining balance-sheet lending with off-balance sheet and co-origination partnerships with larger NBFCs and banks.
Shachindra Nath, executive chairman at U Gro, said the model would help company to boost its return on equity by bringing in a steady pool of fee income while also helping to cater to customers at different risk profiles.
“We want to establish our ability to raise different forms of liability from diverse sources,” Nath said.
Nath, who quit as group chief executive officer at Religare Enterprises Ltd in 2016, founded U Gro after acquiring listed NBFC Chokhani Securities and merging another lending firm with it. Nath had also roped in private equity firms ADV Partners, NewQuest Asia and IndGrowth for the transaction.
U Gro, which began operations earlier this year, provides business loans in sector such as healthcare, education, chemicals, electrical equipment and components, and auto components, among others. In an interview with VCCircle last year, Nath said he along with his team spent a year researching sectors within the SME and MSME sector that required credit solutions.
While the broader NBFC sector has been going through a liquidity crunch following the collapse of IL&FS last year, there have been several deals in the segment in recent months.
Bansal himself has made debt investments in several companies in the financial services and fintech segments. Last month, Bansal acquired Chaitanya Rural Intermediation Development Services Pvt. Ltd by investing Rs 739 crore (around $104 million) in the company and taking charge as its CEO.
In June, VCCircle exclusively reported that Bansal made a debt investment through his company BAC Acquisitions Pvt. Ltd in an NBFC looking to go public. In July, Bansal made a debt investment of Rs 50 crore in consumer lending startup Kissht. That month, he also made a similar investment in the NBFC arm of a financial technology startup.
Other lenders that have raised funding in recent weeks including Kogta Financial (India) Ltd and LoanTap. Earlier on Monday, Kogta said it had raised Rs 300 crore in a Series C funding round from private equity firm Creador and existing backer Morgan Stanley Private Equity.
Last month, digital lending platform LoanTap, which offers loans and overdraft products to salaried professionals, raised $12 million in a Series B investment led by Avana Capital, a US-based debt fund.