Credit and Finance for MSMEs: Collateral-free MSME loans provider Kinara Capital on Tuesday said it has raised Rs 380 crore (nearly $50 million) in the latest equity round led by new investors — Chicago-based global investment manager Nuveen with over $1.3 trillion of assets under management (AUM) and Dutch microfinance fund ASN Microkredietfonds advised by impact-focused investment manager Triple Jump. The company provides Rs 1 lakh to Rs 30 lakh loan within the 24-hour disbursement window with an average ticket size of Rs 10 lakh. It has disbursed around 70,000 loans amounting to Rs 3,000 crore to 40,000-45,000 MSMEs since its launch in 2011 with nearly Rs 1,300 crore AUM as of March 2022 that grew around 45 per cent from the year-ago period.
“This is the growth capital to be deployed towards offering new products, expanding branch network, leveraging for debt so that we have a large runway for the next 18 months. We are seeing that customers are looking for more flexible, short-term, on-demand, and embedded products. So we are working on new technology to deliver more loans to our small business customers. In terms of branch network, we would expand it from current 90 cities to 125 by end of this quarter,” Hardika Shah, Founder and CEO, Kinara Capital told Financial Express Online.
The new round takes the total investment raised by the company including equity and debt to around Rs 990 crore (nearly $130 million). The company had raised around Rs 607 crore ($79.5 million) till October last year when it secured Rs 70 crore funding from Germany-based Visions GmbH (IIV) Microfinance Fund with support from impact investor Agents for Impact (AFI), according to the data from Crunchbase.
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Kinara has a vernacular-friendly digital platform myKinara app as well as doorstep customer service to provide credit access to MSMEs. Borrowers across over 300 sub-sectors in manufacturing, trading, and services can avail online loans through the platform. “Having adopted the digital auto-decisioning solution has helped us to disburse loans faster within 24 hours. We are looking to double the AUM this financial year to around Rs 2,500-2,600 crore as customers are coming out of Covid and there is a definitely huge buzz at grass root level in terms of growth outlook based on consumer demand,” added Shah. In terms of disbursements, the company is expecting 2.5-3X growth this year to around Rs 2,000 crore and Rs 10,000 crore in the coming three years.
Kinara’s net non-performing asset (NPA) ratio is around 3 per cent while “we saw that with our last-mile distribution and collection infrastructure, we were able to be at the same collection efficiency as pre-Covid,” said Shah.
With the new round, Nuveen’s Managing Director & Co-Head of Private Equity Impact, Rekha Unnithan, and Nuveen’s Director of Private Equity Impact, Stephen Lee will join Kinara’s Board of Director. As shareholders, Nuveen and Triple Jump will support Kinara’s continued growth and the continued development of their best in class ESG and impact management system, the company said.
“Taking a digital-first approach without compromising on human customer service, Kinara has outclassed others with its ability to address the pain points of MSMEs in India. With a decade worth of proprietary data, Kinara has perfected its qualification processes and turnaround time,” Unnithan said in a statement.
