Aye Finance Secures $30M Funding from FMO to Support MSMEs

Microlending platform Aye Finance has raised $30 million in debt funding from FMO, the Dutch entrepreneurial development bank to support financial inclusion by providing loans to underserved MSMEs. This latest funding marks the second round for the Gurugram-based company in the past six months.

Aye Finance plans to use the funds to further its mission of financial inclusion by extending loans to underserved micro, small, and medium enterprises (MSMEs) across India.

“Our association with FMO dates back to 2019, and through our collaborative efforts, we have been making affordable credit a reality for the ignored segment of micro enterprises in India. Lack of access to timely financing remains a key roadblock for millions of hard-working microbusiness owners, and we are laser-focused on bridging that gap across the country.”,” said Krishan Gopal, CFO of Aye Finance.

He further added that the critical role this funding will play in expanding Aye Finance’s reach, “This latest funding from FMO will be instrumental in allowing Aye to rapidly scale its lending efforts and include the grassroots businesses, which form the backbone of the Indian economy, in organized lending.”

Product Offerings and Market Competition

In December, Aye Finance raised $37 million in its Series F funding round led by British International Investment, with participation from Waterfield Fund and existing backer A91 Partners. This equity round came after a gap of three years, and the company secured $125 million worth of convertible debentures during FY23.

Aye Finance has disbursed over $915 million in credit to more than 576,000 businesses, boasting a 60 percent repetition rate. The company’s revenue from operations grew 44.5 percent to INR 623 crore during FY23, with a profit of INR 54 crore.

For FY24, Aye Finance reported a threefold increase in profit to Rs 161 crore and a revenue growth of 67 percent to INR 1,072 crore. The company ended FY24 with assets under management (AUM) of INR 4,500 crore and a gross NPA of 1.21 percent.

Aye Finance offers three main products: quasi-mortgage loans, hypothetical loans, and add-on loans, with loan amounts ranging from INR 50,000 to INR 1,000,000. The firm operates over 398 branches across 22 states in India, primarily serving manufacturing, trading, and service groups.

In a competitive landscape, Aye Finance faces rivals such as Indifi, Axio (formerly Capital Float), Lendingkart, and Flexiloans.

Juan Jose Dada Ortiz, Director of Financial Institutions at FMO, stated, “FMO is thrilled to support our long-term client Aye Finance once again as they expand their loan portfolio across India, targeting the missing middle who would otherwise be locked out of the formal credit system of traditional banks.”

Stay ahead of the curve and follow IndiaTechDesk on Facebook, Twitter and Linkedin for in-depth news of market trends, funding updates, and regulatory changes affecting startups in India.