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British International Investment, which led Aye Finance’s last round in December 2023, is also participating, the company said in a statement.
Once the deal is closed, the total equity funding raise by Aye Finance would reach Rs 1,250 crore, on the basis of which it can raise further debt from its lending partners.
Founded in 2014, the lender focused on small and medium enterprises is backed by Alphabet’s growth fund Capital G, Elevation Capital and others. Its initial investors are not participating in this round.
Aye Finance is in the process of filing draft papers to the market regulator for a public listing.
Speaking with ET, Aye Finance managing director Sanjay Sharma did not comment on the IPO plans, but said this round will help the company improve its financial profile and expand scope of operations.
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“Most of these funds will go into financing loans for micro and small enterprises and a small part will go into further automation of our processes,” Sharma said.The company has 478 branches through which it sources customers, but a large part of the collections and servicing is done digitally.
“92% of our customers are registered with the ACH (automated clearing house) mode for their repayments; even in cases where there is a payment bounce, we collect 30% of those payments digitally and the rest through our field collection teams,” he added.
Sharma is looking forward to digital public infrastructure like the NBFC-Account Aggregator ecosystem which he believes could help in credit operations greatly.
Aye Finance operates on the cluster-lending model catering to industries like textiles, dairy, manufacturing and trading. According to a July 19 report by India Ratings and Research, almost 60% of the company’s assets under management are secured through mortgage and hypothecation of underlying inventory.
Its AUM as of May 2024 totalled Rs 4,670 crore. The average loan was for around Rs 1 lakh.