Money & Banking

Aye Finance to get into co-lending with public sector banks this year

KR Srivats New Delhi | Updated on February 11, 2020

Fintech firm looks to raise second round of capital this year

Aye Finance, a new-age fintech firm backed by Capital G (formerly known as Google Capital), will get into some co-lending arrangements with public sector banks (PSBs) this year, its Managing Director Sanjay Sharma has said.

“There is now a push from the RBI to encourage PSBs to get into co-lending arrangements. Very soon, we will be announcing a co-lending arrangement. There is a lot of interest in the market and PSBs are keen to do it. We are evaluating to see which will work best for us,” Sharma told BusinessLine here.

So far, Aye Finance, which started its journey in 2014, had not been looking at co-lending as it had good access to regular debt sources such as term loans, securitisation and external commercial borrowings.

“We have never looked at co-lending. But now that there is interest everywhere, we will go for it,” he said.

Aye Finance, which is a non-banking finance company (NBFC) focused on lending to micro units, has a loan outstanding of about ₹1,700 crore. It has 173 branches in 18 states/union territories. In the last two years, it has recorded strong bottomline performance: from ₹2.3 crore in 2017-18, the net profit has grown to ₹25.08 crore in 2018-19; it is likely to touch ₹45 crore (IndAS) in 2019-20.

“Profit after tax has grown by 20x over the last two years on the back of internal efficiencies and managed credit loss,” Sharma said.

The fintech firm, which has done ₹10 crore of supply-chain financing this fiscal (2020-21), is looking to step up this business.

Capital raising

Aye Finance, which had raised ₹233.62 crore in April 2019 as Series D capital, will definitely raise the next round in fiscal 2020-21, Sharma said.

“There are lots of people approaching us, offering capital. There is so much interest in the market to fund good NBFCs. We will look at that. Our need for funds will come later in the year. If we find somebody who fits into our model of lending, we will certainly raise money from them,” Sharma added.

Although the first half of this fiscal was the worst for NBFCs, things have turned for the better in the last three months, largely due to RBI’s push and government’s efforts.

“We will end this fiscal on a better note. Growth of NBFCs has slowed down, but they may bounce back next year. Although NBFCs, in aggregate, may not have exhibited growth, we have grown from revenues of ₹ 1,075 crore for FY18-19 to about ₹1,800 crore this fiscal. We swam against the tide,” he added.

Published on February 11, 2020

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