Veritas Finance raises ₹120 crore in Series B round from CDC, Lok Capital

Chennai-based Veritas Finance, a non-banking finance company that lends to micro and small businesses, says that the ₹120 crore it raised as equity in a Series B round will see it through a large part of the next financial year. It is on course to achieving a loan book of ₹330-350 crore by the end of this financial year.

Veritas may look at another larger round of fund-raise towards the end of 2018 to help it meet its business requirements for the next financial year and beyond. It plans to grow its loan book to around ₹1,000 crore in 2019.

CDC Group, UK’s development finance institution, which led the Series B round with a contribution of ₹65 crore as equity, also gave ₹35 crore as debt to Veritas.

Existing investor Lok Capital, an impact investment venture capital firm, put in ₹45 crore through two funds managed by it, and PS Pai, former executive chairman, Murugappa Group, also an existing investor, and his wife, contributed ₹10 crore.

The company had raised ₹30 crore in Series A round in April 2016, with investments from Lok Capital-advised Sarva Capital and Caspian Impact Investment.

The fresh round of fund-raise takes Veritas’ equity to ₹165 crore. It can leverage three-four times that amount through debt to lend to small businesses, but D Arulmany, Managing Director and CEO, says the company will be conservative in its borrowings and not leverage more than three times.

The Series B round will be used to introduce new products, expand to Andhra Pradesh and Telangana, and increase the coverage in the States it is already present in. Veritas has 600 employees in 60 branches and 100 micro-centres in Tamil Nadu, Puducherry, Karnataka, West Bengal and Odisha.

Veritas, which launched operations in 2015 end, has over 12,000 customers on board. “We will use the fresh funds to reach out to new businesses and first-time borrowers, who would otherwise go to local moneylenders paying high rates of interest,” Arulmany, who is the founder of Veritas, said.

It has launched a new product to meet the working capital requirements of small businesses in urban areas, with flexible repayment options.

The company gives ₹50,000-1 lakh through this facility to small businesses in 10 locations in Tamil Nadu. It is also trying out long-term -- up to 10 years -- loans for housing construction, to meet 70-80 per cent of the construction cost.

Arulmany said the demand for credit from its target segment continued to be good and Veritas was well on its way to meet this year’s loan book target and next year’s too.

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