German DFI DEG marks first direct India bet with SME lender LivFin

Delhi headquartered supply chain and invoice finance provider LivFin India has raised $5 million in a funding round from German development finance institution (DFI) DEG. This is the DFI's first direct bet in India. DEG provides long term finance to private companies in emerging markets.

TechCircle had previously reported that LivFin was in talks to close the round in July.  The non-banking finance company had raised debt worth Rs 100 crore in 2018 from AU Small Finance Bank and Northern Arc Capital, and had raised equity funding from the family office of SAR Group.

The small and medium business focused lender will utilise the capital to expand operations and increase assets under management to $40 million by March 2020.

“DEG’s equity investment provides LivFin multiple positives: it’s a validation of our business model and recognition of our rapid growth, our tech based credit and operations processes, and high governance standards,” Rahul Chander, CEO of LivFin, said in a statement issued by the company. 

“The investment will be a boost to our planned growth over the next 12-18 months, and makes LivFin a serious player in the supply chain finance space in India,” he added.

Founded in 2018, LivFin is promoted by the family office of Rakesh Malhotra who is also the promoter of SAR Group. Malhotra was the founder of inverter maker Luminous Power Technologies which was sold to Schneider Electric in 2011. Since then, Malhotra has ventured into e-mobility apart from energy storage (LivGuard) and water purification (LivPure) products.

According to the statement, LivFin has disbursed over $150 million in aggregate and has started co-lending with NBFCs where the co-lender finances 80% of the loans and the rest is funded by LivFin through its technology-enabled platform. LivFin provides unsecured short term working capital to finance small businesses based on unpaid invoices with larger ‘anchor’ businesses.

Despite the overall slowdown in the NBFC sector, deals have picked pace. Invoice discounting platform KredX recently raised $26 million led by Tiger Global earlier this month.

SME-loans platform Incred, raised a debt round from a group of investors. In September, SME focused lender Clix Capital raised $40 million from existing investor AION Capital.