MSME Lending firm Aye Finance raises Rs 310 crore led by British International Investment

Sanjay Sharma, cofounder and MD of Aye Finance

Micro-enterprise lending firm Aye Finance has raised Rs 310 crores in its Series F funding round led by UK's development finance institution British International Investment (BII), in yet another instance of investors increasingly backing fintech startups in 2023.

The Waterfield Fund of Funds and Aye’s existing shareholder A91 Partners also participated in this round.

"We have 395 branches and we plan to expand this rapidly, we will be using the fund towards that and we will also be expanding our team," said Sanjay Sharma cofounder and managing director of Aye to Moneycontrol.

Founded in 2014 by Sharma and Vikram Jetley, Aye enables small-ticket loans and working capital loans to micro-enterprises. The lender provides mortgage, hypothecation and term loan services to micro enterprises.

"We feel there is enough market to capture within the MSME space. We will not be diversifying right now but will continue to penetrate into the MSME lending space. We have 330,000 active customers and 700,000 total customers lent to so far and it is still a small part of 600 crore market," Sharma told Moneycontrol.

Aye Finance is headquartered in Gurgaon and has branch presence in 22 states through its 395 offices.

Aye has so far raised Rs 1,000 crores of equity. In December 2022, Aye raised around Rs 70 crores from Zurich-based responsAbility Investments AG. The firm has company has partnered with investors like CapitalG, Elevation Capital, Lightrock, Alpha Wave, A91 Partners and MAJ Invest in its previous funding rounds.

"The company is committed to easing access to credit for small businesses and has disbursed Rs 8,000 crores to the segment since inception bringing over 700,000 unorganised businesses into the formal lending ecosystem," Sharma said.

The firm has over Rs  3,600 crores of Asset Under Management and has delivered Rs 80 crores of PAT in the first six months of FY24.

"We have reduced our operating cost with more productivity efforts at Aye Finance. We are growing at 50-55% every year, we will look at expanding to other states and cities in the next year. Last year we expanded to Odisha, West Bengal and Jammu, we will look at entering more Northeastern states," Sharma said.

The firm is also mulling over entering the public markets in FY26.

"We will have enough funding for the next two years. We have an AUM of Rs 3,600 crore which will grow to Rs 7,000 crore in two years and then we may think of an IPO, which is in FY26," Sharma said.