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SME lender Aye Finance raises debt funding worth $11 mn
Photo Credit: VCCircle

Fintech lender Aye Finance, backed by multi-stage investor SAIF Partners and Google's venture capital arm CapitalG, said it has raised Rs 80 crore ($11.1 million at current exchange rate) in debt.

The debt funding came from one of India's leading banks, a person familiar with the development told VCCircle, without disclosing the name. 

The micro, small and medium enterprise (MSME) lender, Aye, plans to utilise the funds for growth, the non-banking financial company (NBFC) said in a statement. Aye plans to raise another Rs 300-400 crore as part of its debt fundraising plan in the current financial year. Managing director Sanjay Sharma said the company will continue to look for funding as slowdown has not impacted demand, nor has the NBFC crisis affected Aye. "We need funds to the tune of Rs 100 crore every month," Sharma said.

The development comes more than one and a half months after news of the lender raising Rs 55 crore from Maharashtra-based DCB Bank.

In March, the NBFC raised around Rs 253 crore ($36 million) through a mix of equity and debt funding led by Falcon Edge Capital.

Earlier in January, Aye raised $10 million (Rs 71 crore) in debt funding from Swiss asset manager responsAbility Investments AG and homegrown Northern Arc Capital. 

Last year in June, VCCircle reported that Aye had raised Rs 147 crore (around $21.5 million) in a Series C round of funding from CapitalG, SAIF and LGT Impact Ventures to grow its business. 

Last financial year it closed two equity rounds – Series C and D, raised Rs 380 crore, and added CapitalG, Falcon Edge and MAJ Invest to its suite of investors.

Since its inception in 2014, Aye has disbursed over Rs 2,200 crore to 150,000 micro enterprises in India. Its current assets under management stand at Rs 1,200 crore.

Over the past six months, it has opened 67 new branches and expanded its presence to 171 branches in 18 Indian regions to further ease micro enterprises access to affordable credit, the company said. 

The Gurugram-based firm was also recently featured on the list of 268 systemically important NBFCs in India released by the Reserve Bank of India (RBI).

Aye adopts an industry-clusters approach for credit assessment of the unbanked micro enterprise segment tapping into various alternative data sources like typical cash flows, seasonal fluctuations, and the strength of the ancillary network, to help it make accurate risk selection even in the absence of traditional business documentation and credit histories.

News of Aye fundraising comes days after VCCircle said that Altico Capital India Ltd, backed by private equity money, has defaulted on its debt as it plunged deeper into a liquidity crisis that has plagued NBFCs for the past year.

The Mumbai-based company failed to make an interest payment of Rs 19.97 crore to United Arab Emirates-based Mashreqbank PSC. The payment was due on a loan of Rs 340 crore, Altico said in a regulatory filing. The loan has a six-year tenor and an interest rate of 11.65%. The default adds to the raft of bad news in the shadow banking sector in India, with many non-bank lenders struggling to tide over the liquidity crisis that began when Infrastructure Leasing & Financial Services Ltd virtually collapsed last year. The going has been tougher for real estate-focused lenders such as Altico as India’s housing market continues to grapple with tepid demand and sales.

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