MUMBAI: Small business lender Aye Finance Pvt. Ltd has raised $10 million in debt from responsAbility Investments AG, a Swiss impact investor, said a senior executive.
“We plan to use the funds raised for growth, to lend more and build a profitable loan book, and are seeing significant demand despite the liquidity crisis," said Sanjay Sharma, managing director, in a phone interview.
Aye Finance generally lends ₹1-2 lakh to businesses with a turnover of ₹10-30 lakh a year. It has raised about $70 million in equity so far, last raising about $36 million in a Series D round from US-based Falcon Edge Capital, Alphabet’s investment arm Capital G, and venture capital firm SAIF Partners, among others.
In the current round, it has raised $5 million from responsAbility through non-convertible debentures (NCDs) and the balance $5 million has been issued from a securitization pool raised by responsAbility, which was arranged by JPMorgan.
Key investors in the transaction include the Overseas Private Investment Corp. (OPIC), a US government agency focusing on development finance and Alecta, a European pension fund. Despite the slowdown in the non-bank lending sector due to a liquidity crunch, Aye claims that its growth has been relatively unaffected.
“Our growth has not slowed down at all because our borrowers’ funding requirement is less, the payback period is relatively shorter and we have a good track record," Sharma said.
While Aye is currently disbursing about ₹100 crore a month and has a loan book of ₹1,100 crore, it plans to double disbursements, and expects to have a loan book of about ₹1,700 crore by the end of the year.
“The coming months are peak season for micro enterprises because of festive demand. We expect a significant uptick, and to lend about ₹200 crore a month by the end of the year," Sharma said.
Two small business lenders have raised equity capital in the last week, with others continue looking for funds.
While Indifi, which provides loans to small businesses in travel, e-commerce and retail raised ₹145 crore led by the UK government’s CDC Group; Lendingkart, which offers collateral-free working capital and other business loans to small businesses, raised ₹212 crore from its existing investors including Fullerton Financial Holdings and Bertelsmann India Investments
Aye has raised about ₹1,200 crore of debt so far, from global impact investment managers TripleJump BV and MicroVest Funds, as well as responsAbility and Northern Arc Capital, from whom it raised $10 million in February this year.