Micro-enterprise lending firm Aye Finance raises Rs 310 crore led by BII

Aye Finance, a micro-enterprise lending firm, has raised Rs 310 crore in a Series F funding round led by the UK's development finance institution, British International Investment (BII).

The round also saw participation from the Waterfield Fund of Funds and Aye’s existing shareholder, A91 Partners. 

Expansion and growth plans

Sanjay Sharma, co-founder and managing director of Aye Finance, outlined the company's ambitious plans following this latest funding round. "We have 395 branches and we plan to expand this rapidly," Sharma stated.

According to the firm, the raised capital would be utilized for expanding the team and the branch network, with an aim to open an additional 80 branches in FY24.

Aye Finance, founded in 2014 by Sharma and Vikram Jetley, focuses on providing small-ticket and working capital loans to micro-enterprises.

How well Aye Finance is performing financially?

Aye Finance has robust financial health, with over Rs 3,600 crore in Assets Under Management (AUM) and a reported profit after tax (PAT) of Rs 80 crore in the first half of FY24.

Sharma revealed that the company is growing at a rate of 50-55% annually and has plans to expand into more states and cities in the coming year. Looking ahead, It is considering an initial public offering (IPO) in FY26, as it expects its AUM to grow to Rs 7,000 crore in two years.

Impact on micro-enterprises

Since its inception, Aye Finance has disbursed Rs 8,000 crore to the micro-enterprise segment, bringing over 700,000 unorganized businesses into the formal lending ecosystem.

The company's approach includes using cluster-based credit assessment with AI algorithms, especially in scenarios lacking traditional business documents. Notably, The strategy has been pivotal in addressing the credit needs of a significant portion of India's 64 million MSMEs.

Aye Finance investors 

In December 2022, Aye Finance raised around Rs 70 crore from Zurich-based responsAbility Investments AG. CapitalG, Elevation Capital, Lightrock, Alpha Wave, A91 Partners, and MAJ Invest are some of its investors.

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