CapitalG-backed Aye Finance raises $10 mn debt from responsAbility Investments

Non-banking finance company Aye Finance has raised $ 10 million in debt funding from responsAbility Investments AG, a Swiss impact investor.

The funding round came within two weeks after Aye Finance raised $7.9 million from DCB Bank through a securitisation deal.

Aye will be using the funds to offer business loans to the excluded micro-enterprise sector to support growth and enable inclusion in the formal economy, an official statement said.

Aye raised $5 million from responsAbility through non-convertible debentures and $5 million from a securitisation pool arranged by JP Morgan.

Key investors in the transaction include the Overseas Private Investment Corporation (OPIC), a US government agency providing the initial capital necessary to mobilise the private institutional investment in the deal, and Alecta, the occupational pension provider in Europe and investing in the essential risk capital.

Aye Finance was founded in 2014 by Sanjay Sharma and Vikram Jetley, both former executives at Ujjivan Financial Services, the holding firm for Ujjivan Small Finance Bank. 

Google parent Alphabet’s growth equity fund CapitalG, SAIF Partners, Accion International and LGT Impact Ventures are among its investors.

The Gurugram-based company has raised over $221 million in debt and equity through a variety of instruments.

Aye Finance provides working capital and business development loans using a cluster-based approach, supported by a proprietary underwriting methodology. The company claims to have disbursed over Rs 2,000 crore to more than 125,000 under-served and under-banked grassroots businesses.

“This latest fundraise from responsAbility, which comes within three months after we raised Rs 234 crore in Series D equity round, is a validation of the trust the investor community has in our model and in our ability to achieve our mission,” said Sharma.

Zurich, Switzerland-headquartered responsAbility is an asset manager for impact investments in emerging economies managing $3 billion through a range of investment vehicles that provide private debt and private equity to some 540 companies with inclusive business models across 90 countries. 

“Through this transaction, we bring global markets a step closer to the impact created by our partner institutions. We are pleased to have partnered with Aye Finance that has successfully built a scalable credit delivery channel aimed at financially excluded borrowers by combining its strong market understanding with technology,” said Jaskirat S Chadha, head of financial institutions, Asia Pacific,  responsAbility.