Pune-based non-banking financial company Electronica Finance Ltd has raised about $14 million (over Rs 100 crore) from New York-based impact investment and advisory firm Encourage Capital, per an announcement.
Encourage Capital, via its fund Encourage Solar Finance LP, has picked up a minority stake in the Indian company by subscribing to compulsorily convertible preference shares (CCPS) in lieu of the investment.
Electronica Finance will use the funding proceeds to finance business growth in the existing product segments and to fund expansion into the new rooftop solar financing business, it said in a statement.
“EFL has been growing at a rapid pace and continues to focus on the MSME sector, which despite being the new engine of growth has been facing numerous challenges, including the availability of finance. The incremental funds raised will enable us to cater to the MSME segment in a more vigorous way as well as grow our business in machinery financing through various funding options. It will also fund our foray into the new rooftop solar financing business for MSMEs,” Shilpa Pophale, MD, Electronica Finance Ltd, said.
Incorporated in 1990, Electronica Finance focuses on assessment-based financing, through varied products like machine loans, business loans, secured loans for micro-enterprises, etc. To date, the company claims to have served over 7,500 customers and has a presence in 15 states through 55 branches and over 450 employees. As of September 30, 2019, the company’s assets under management (AUM) were close to Rs. 1,350 crores.
In April, the company also entered into an agreement with a responsAbility-managed climate fund for issuance of $10 million in green masala bonds.
Meanwhile, Encourage Capital was formed through a combination of Wolfensohn Fund Management, founded by former World Bank President, James D. Wolfensohn, and EKO Asset Management.
Edelweiss Financial Services advised on the transaction.