Several veterans from the financial services space including Sanjay Nayar, chief executive of KKR India, and Vikram Sud, former head of operations and technology at Citibank, are joining hands with Mumbai-based fin-tech loan company FlexiLoans Technologies Pvt. Ltd with an investment of Rs 100 crore in their personal capacity.
The funding will be used for FlexiLoans' expansion and for further investment in its technology and marketing platform built for digital lending catering to short-term working capital needs within 24 hours of an application by underserved SMEs across the nation, the company said in a statement.
As per the terms of the deal, EpiMoney, a non-banking finance company founded by marquee investors Nayar, Sud along with Anil Jaggia, chief investment officer at HDFC Bank and Narayan Seshadri, former managing director at KPMG's advisory business would be acquiring stake in FlexiLoans, which will be the product platform.
In July, VCCircle first reported that FlexiLoans, focused on disbursing working capital loans to small and medium-sized companies, started operations in January and was founded by four Indian School of Business alumni—Deepak Jain, who was a former investment banker at Axis Capital, Manish Lunia, former executive at Aditya Birla Group's M&A unit, and Ritesh Jain, former CFO of Housing.com, and Abhishek Kothari, a data science and analytics professional.
Starting operation in April, the online platform manages customer sourcing and underwriting. Since starting operations, the firm has disbursed 1,000 loans with an average loan between Rs 2 lakh and Rs 4 lakh targeting small business enterprises and small ticket loan from individual customers who don't have proper credit scoring.
The fintech company has already partnered with over 20 national digital marketplaces and organisations such as Flipkart, Ola, ShopClues and Jabong serving over 2 million small businesses and has served customers in over 18 cities and towns, the statement added. After sourcing loans from the partner sites, it underwrites their loans using a proprietary credit scoring system for a loan from its partner NBFCs. After the deal, Epimoney would be able to lend from its book.
It has developed a proprietary credit engine, which vets the application form and makes the loan decision within 24 hours and this distinguishes FlexiLoans from traditional credit scoring methods used by other financial institutions. The platform uses several traditional and non-traditional sources of data to score an applicant, which means that each applicant's score is unique in keeping with the loan amount and profile of the applicant.
"Such a digital platform would fill a much-needed service to underserved SMEs and consumers in India," said Nayar, who manages nearly $5 billion of investments in global buyout giant KKR & Co's India portfolio through various instruments including private equity, structured finance and real estate investments.
Narayan Seshadri, chief executive at Halcyon, was head of KPMG's business advisory practice in India for a long time. Vikram Sud used to work with Sanjay Nayar at Citigroup and was helming Citi's technology initiatives. Anil Jaggia was the CIO of one of India's largest Indian Retail Bank, HDFC Bank.
"Lack of access to finance for micro-SMEs is a major bottleneck to growth in India. We are confident that the strong banking domain mentorship that we get with this tie-up combined with our advanced technology platform will help us serve many deserving yet underserved entrepreneurs" - said Ritesh Jain, cofounder of FlexiLoans.
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