Impact investor Accion sells Aye Finance stake to A91 Partners

Accion, the US-based non-profit and impact investor focused on the financial inclusion sector, has exited its investment in SME (small and medium enterprises) lender Aye Finance. Accion Venture Lab, its seed stage investment arm, has sold its remaining stake in the Gurugram-based NBFC (non banking finance company) to A91 Partners, the venture capital firm founded last year by former Sequoia Capital India executives. 

The secondary stake sale marks a complete exit by Accion from Aye Finance, it said in a statement. While the financial details of the secondary stake sale to A91 were not disclosed, financial daily Mint put the value of the transaction at $20 million.

In 2018, the impact investor sold a part of its stake in Aye Finance when the company raised $5.5 million in a  funding round from LGT Bank-owned LGT Capital Invest, hedge fund Falcon Edge Capital and private equity fund MAJ Invest Financial Inclusion Fund, according to data compiled by VCCEdge.

Between 2015 and 2016, Accion Venture Labs, one of the earliest investors in Aye Finance, infused $3.3 million over two seed rounds and one Series B round, the VCCEdge data showed.

“We are pleased to have played a role in Aye’s success, reaching thousands of Indian entrepreneurs through a unique MSME (micro, small and medium enterprises) cluster-based approach, and are confident that A91 is the right partner to support the company’s continued growth and expansion,” Abhishek Agrawal, chief regional officer for South Asia for Accion, said in the statement.

Founded in 2014 by Sanjay Sharma and Vikram Jaitley, Aye Finance now claims to have 140,000 micro enterprises as customers and has provided loans of upto $410 million to MSMEs. Aye Finance has developed various artificial intelligence and machine learning models for its operations to enable better disbursal, have control on its asset book quality and for improved efficiencies.

So far, Aye Finance has raised $253 million through diverse securities issues, according to VCCEdge. In December, it raised $15 million in debt funding from Switzerland-based impact investor BlueOrchard. 

“Accion has been a supportive partner in our transition from a startup to a mid-size organisation. A91 Partners are a quality investor team and our growth trajectory will get strengthened with their India focus,” Sharma, co-founder of Aye Finance, said. 

The deal was led by Kaushik Anand of A91 Partners, who was on the board of directors of Aye Finance as nominee director of CapitalG. Google parent Alphabet’s private equity firm CapitalG is also an investor in the NBFC. 

“Over the past two years, Aye Finance has grown from Rs 500 crore to over Rs 1,500 crore of assets under management using technology as a backbone to scale the business. We look forward to partnering with Sanjay and team in their journey to build an enduring franchisee,” Anand said.

A91 Partners was founded by former Sequoia executives VT Bharadwaj, Vikram Mago and Abhay Panday, along with former CapitalG India head Anand. A91 Partners’ portfolio includes smart fan maker Atomberg Technologies, Hector Beverages-owned refreshment drinks brand Paper Boat and subscription-based personal care ecommerce platform Sugar Cosmetics.