Ess Kay Fincorp Ltd, a non-banking financial company that focusses on the commercial vehicle and small business segments, has raised Rs 86 crore ($11.76 million) in debt funding from Swiss asset manager responsAbility AG.
Jaipur-based Ess Kay said in a statement it had raised the funding by issuing non-convertible debentures via the voluntary retention route (VRR). The VRR was introduced by the Reserve Bank of India last year to grant foreign portfolio investors a new channel to make long-term investments in the Indian debt capital market.
The transaction was facilitated by CredAvenue, the online enterprise debt platform operated by financial services platform Vivriti Capital.
Ess Kay will use the financing mainly for lending to its customers. It will also look to diversify its resource mix, the NBFC said.
“Our endeavour has and always will be to help customers further grow their small enterprises, thereby creating large-scale impact in the rural economies,” Ess Kay treasury head Vivek Singh said.
The development comes after Dutch development finance company FMO said in October last year it was considering committing $40 million (around Rs 283.21 crore) in debt funding to Ess Kay. At the time, FMO said the funding would help grow the compressed natural gas portfolio of Ess Kay, which primarily helps customers in rural and semi-urban India buy used vehicles and run small and medium-sized enterprises.
Promoted by Rajendra Kumar Setia, Ess Kay operates through a network of 300 branches in six states across northern and western India, with more than 2.25 lakh customers. The average ticket size for vehicle financing is Rs 3 lakh for an average tenor of three years, and Rs 7 lakh for five-year SME loans.
In January 2018, Norwest Venture Partners led a $32 million (around Rs 200 crore) funding round in Ess Kay. About half of this amount constituted primary infusion into the lender and the remaining went to private equity investor BanyanTree Growth Capital, which fully exited the company.