Aye Finance, an India-based micro-enterprise lender, has entered into definitive agreements for INR 310 crores ($37 million) in Series F funding, led by United Kingdom’s development finance institution and impact investor British International Investment (BII).

The Waterfield Fund of Funds and Aye Finance’s existing shareholder A91 Partners also participated in this round, Aye Finance said in a statement on Wednesday.

According to the statement, Avendus Capital was the exclusive financial advisor to Aye Finance for this transaction.

The deal completion is subject to completion of standard conditions precedent.

Aye Finance has so far raised INR 1,000 crores of equity, underscoring the continued confidence and support from the investment community in the lenders’ mission and growth trajectory.

“Aye Finance is on a growth journey and we are delighted to partner with BII who have a deep understanding of the financial services sector in India,” said Sanjay Sharma, Co-Founder, Managing Director and Chief Executive Officer of Aye Finance.

According to him, this equity raise is a testament to the strong conviction that investors have in a high-quality franchise such as Aye Finance.

“We believe there is immense potential in lending to underserved microenterprises and the fresh capital will provide a strong fillip to our compounding story,

“We look forward to this partnership and hope it will help us achieve new heights,” he added.

Incorporated in the year 2014, Aye Finance is a micro, small and medium enterprises (MSME) lender providing business loans to the micro enterprise sector across India.

The firm is headquartered in Gurgaon and has branch presence in 22 states through its 395 offices.

The lender provides mortgage, hypothecation and term loan services accessible to India’s thriving and underserved micro enterprises.

Aye Finance distinguishes itself by utilizing technology in mitigating the challenges faced by MSMEs in securing loans.

The company has partnered with marque investors which includes CapitalG, Elevation Capital, Lightrock, Alpha Wave, A91 Partners and MAJ Invest.

According to the statement, Aye Finance is committed to easing access to credit for small businesses and has disbursed INR 8,000 crores to the segment since inception bringing over 700,000 unorganized businesses into the formal lending ecosystem.

Along with enabling financial inclusion of this historically underserved segment, the firm has also been consistently delivering profits to its investors.

The company has over INR 3,600 crores of asset under management and has delivered INR 80 crores of profit after tax (PAT) in the first six months of FY24.

“There are over 64 million MSMEs in India and only 11 percent of micro enterprises have access to formal credit,

“Therefore, I am thrilled that through partnering with Aye Finance, we are not only helping to bridge this gap but
also enabling micro entrepreneurs and their employees to grow their businesses and incomes,” said Gaurav Malhotra, Director for Financial Services, British International Investment.

“Our investment in Aye Finance underscores our commitment to back companies that have a strong development impact philosophy and promote financial inclusion for India’s underserved groups,

“The team from Aye Finance stands out for its dedication and experience in offering tech-enabled financing solutions with high potential for scalability,” he added.

BII invests to support the United Kingdom government’s clean green initiative and to create productive, sustainable and inclusive economies in our markets.

Between 2022-2026, at least 30 percent of BII’s total new commitments by value will be in climate finance.

BII is also a founding member of the 2X Challenge which has raised over $16 billion to empower women’s economic development.

The company has investments in over 1,470 businesses across 65 countries and total assets of £8.1 billion ($10.34 billion).

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