Both Sequoia and Faering are existing investors in the Jaipur-based lender, which lends against mortgages to customers in Rajasthan, Delhi and Madhya Pradesh through its 100-odd branches.
The US-based Sequoia has invested Rs 216 crore while Aditya Parekh-led Faering put in Rs 44 crore in this round concluded Monday, people familiar with the matter said.
Besides equity expansion, Finova has borrowed Rs 130 crore from multiple sources including State Bank of India, Bank of Baroda and Bandhan Bank to expand its business, founder cum managing director Mohit Sahney told ET.
“There is a demand from small entrepreneurs as they are trying to rebuild their businesses after the initial impact of the pandemic. At the same time, a lot of NBFCs have stopped funding because of liquidity issues creating a vacuum in the market,” Sahney said.
The current credit gap for MSMEs in India is estimated at $380 billion, according to Ishaan Mittal, principal, Sequoia Capital India LLP.
Finova lends to micro entrepreneurs and semi-skilled professionals who typically have limited access to credit from formal financing institutions. It offers loans of around Rs 3-5 lakh for up to seven years at 21% to 25% annual interest rate.
Sahney said that the fresh equity infusion will take care of the lender’s business plans for the next two years. Bangalore-based Unitus Capital advised Finova on both equity and debt transactions.
“We are happy to help Finova raise capital in these difficult times. It attests to the strength of its business,” said Amit Jhanvar, director at Unitus Capital.
Founded in 2016 by Mohit and Sunita Sahney, the non-bank lender has about Rs 460 crore of assets under management. It has a net worth of Rs 440 crore. It has raised a total $56 million in equity since 2017. The lender is also present in parts of Uttar Pradesh, adjacent to Delhi. It plans to expand in Haryana, too.