Aye Finance wants to mop up $25-40 million in next round

NEW DELHI: SAIF Partners-backed Aye Finance is looking to raise $25-40 million to fuel its expansion plans, a top company executive said.

"We definitely require capital by the first quarter of the next financial year. By this time we will already be leveraged three to three and half times our equity," Sanjay Sharma, managing director of Aye Finance, told ET.

Earlier this year, the fintech startup, which is also backed by State Bank of India, had raised $8 million from global impact investment manager Blue Orchard.

According to Sharma, the SME lending-focused company has signed non-disclosure agreements with a several private equity funds based out of the US, Europe and India, as well as three development finance institutions--Blue Orchard, Triodos and Amsterdam-based development bank FMO, which are existing investors in the company.


"What is fuelling growth for most SME-focused players like us is that although demand for formal sources of capital had been high in this market, the supply-side challenges are slowly getting addressed by the new NBFCs," Sanjay said.

Capital is the raw material for lending ventures, and this year most startups that are dealing in unsecured loans for small and medium enterprises have seen multiple rounds of financing from both venture capital and debt institutions.

Most of these companies lend from their balance sheets or through a hybrid model, wherein they lend alongside banks and other NBFCs.

The development comes at a time when a number of SME loan-focused NBFCs are raising fresh funds or are eyeing big-ticket follow-on funding from investors.

Early this year, SME lender Capital Float, which is also backed by SAIF Partners, had raised $45 million in a round led by Silicon Valley-based Ribbit Capital, with significant contribution from existing investors SAIF Partners, Sequoia India and Creation Investments Capital Management.

Also Bengaluru-based SME lender Vistaar Finance, which is backed by PE firm Westbridge Capital, garnered about $18 million in a debt funding round led by Reliance Mutual Funds. Reportedly, the company is in the market to raise another $50 million from private equity investors.