Small business lender Aye Finance Pvt. Ltd on Tuesday said it has raised ₹ 125 crore in debt from Dutch development bank FMO — its second such debt infusion in the last three months.
FMO said it will work closely with Aye Finance to expand services to women entrepreneurs in the country through a Gender Finance programme. This transaction, where Aye raised non-convertible debentures, was executed by Chennai-based Northern Arc Capital, also an existing investor in Aye Finance.
“While we have women as co-applicants for over 95% of our loans, we believe we can do more in enabling the women micro enterprises of India to bring about a more transformative impact on the economy," said Sanjay Sharma, managing director of Aye.
“We expanded our branch network this year to the states of Bihar, Jharkhand, Gujarat & Maharashtra which have a prevalence of women entrepreneurship and with these funds from FMO we will be supporting the growth of women led enterprises in these states as well in the other 14 states that we have our presence," he added.
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, including 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.
It last raised $10 million in debt from responsAbility Investments AG, a Swiss impact investor in August this year.
In an interaction with Mint in August, Sharma had 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. It is also scaling up lending driven by the festive season uptick October onwards.
Aye has also managed to grow and keep a relative check on defaults in what has been a testing time for the non-banking financing industry, which has been bogged down by a severe liquidity crunch and has seen a number of high scale defaults at institutions such as Dewan Housing Finance Ltd. and Altico Capital among others.
Two small business lenders have raised equity capital in the past few months, while others continue to look for funds. Indifi, which provides loans to small businesses in travel, e-commerce and retail raised ₹145 crore led by the UK government’s CDC Group in August; 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 around the same time.