Tech-driven lender InCred secures $86 mn in Series A funding

Online loan platform InCred Financial Services Ltd said it has raised Rs 600 crore ($86 million at current exchange rate) in a Series A funding round led by Dutch development bank FMO. 

The following also participated in this round: Early backer Alpha Capital, New York-based asset manager Moore Strategic Ventures, and social-impact venture capital firm Elevar Equity.

The non-banking financial company (NBFC), backed by private equity firms and former Deutsche Bank co-chief executive Anshu Jain, will use the fresh capital to boost its balance-sheet lending as well as to strengthen its technology initiatives to drive analytics and risk-management capabilities. Currently present across more than 20 cities in India, the company plans to penetrate deeper into these markets while also expanding to Tier-III cities.

According to filings with the corporate affairs ministry, the company has raised around Rs 406 crore ($58 million) in the Series A round. The rest of the Rs 600 crore sum talked about above could come in tranches. 

By the filings, Mauritius-based V Ocean Investments also participated in this round. Trust services provider Vistra ITCL acted as a trustee for Elevar. Of the amount worth around Rs 406 crore, FMO accounted for Rs 245 crore ($36 million), Moore Rs 69 crore ($9.8 million), Elevar Rs 51.7 crore ($7.4 million), Alpha Rs 30 crore ($4.2 million), and V Ocean Rs 10.8 crore ($1.5 million). The amount worth around Rs 406 crore was raised at a valuation of $298 million, according to TechCircle estimates.

Bhupinder Singh, a former Deutsche Bank executive, incorporated InCred in 2016 and raised Rs 600 crore in the same year from Anshu Jain, Manipal Group managing director Ranjan R Pai, Landmark Holdings founder Gaurav Dalmia, IDFC PE, Alpha Capital and Paragon Partners.

The Mumbai-based company launched operations in January 2017.

InCred claims to be a new-age financial services platform that leverages technology and data science. While loan applications can be made online, the company also has physical branches at different locations in the country.

The firm disburses four types of loans -- personal, education, home and SME (small and medium enterprise). 

Last year, InCred appointed former Yes Bank executive Vivek Bansal as its chief financial officer (CFO).

Singh said, “Urban migration, increasing disposable incomes, and digitisation have brought India close to the tipping point of rapid growth in financial services. This will create a massive gap between the demand and supply of credit across all strata of society.” He added, “Financial institutions that can use technology to deliver innovative products with quality customer experience are best placed to serve this gap. The key to long-term success will be laser-sharp focus on risk management through a combination of analytics and traditional underwriting.”

Investors

FMO has a committed portfolio of 9.2 billion euros in 85 countries. It finances projects in sectors such as agri-business, food and water, energy and financial institutions in under-served markets. 

In February, FMO had co-invested along with German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG) in a subsidiary of Avaada Power Pvt. Ltd, which was started by Welspun Renewable Energy founder Vineet Mittal.

Last December, FMO extended Rs 200 crore in debt funding to non-banking financial company Northern Arc Capital Ltd.

The same month, microfinance company Satin Creditcare Network secured $30 million (Rs 216 crore) in debt funding from FMO.

Founded by Vishal Ootam and Vivek Anand, Alpha Capital is an investment management firm based in Mumbai. The company is backed by Sat Pal Khattar (Khattar Wong – Singapore), Darshan Patel (Vini Cosmetics), Mohandas Pai (former finance chief and human resources head at infotech major Infosys) and Ranjan Pai (chief executive and managing director of Manipal Group). Apart from InCred, Alpha has invested in Food Link Services Pvt. Ltd, Hero Electric Vehicles Pvt. Ltd, and CredAble over the last year.

Bengaluru-headquartered and Seattle-headquartered Elevar Equity mainly invests in enterprises serving low-income communities. Its investments in India include Varthana, a lender to schools serving low-income groups; Indifi, an online platform that connects small and medium businesses with lending institutions; SecureNow Insurance Broker; and Samunnati Financial Intermediation and Services.

Moore Strategic Ventures is a unit of global investment management firm Moore Capital, which currently manages approximately $10 billion in assets on behalf of individuals, endowments, foundations, and other institutional investors.

Details about V Ocean are not known.