Exclusive: IntelleGrow in talks to raise $100m via debt, equity in next few months

With its eyes set on doubling its assets under management to Rs 640 crore ($99 million) this year, venture debt firm IntelleGrow is in talks with investors to raise $100 million through debt and equity.

“In this financial year, we are looking at a combination of debt and equity to raise about $100 million. I would say 20 per cent there about would be the equity part. The remaining part would be debt which would be loans as well as NCDs,” IntelleGrow CEO, Akbar Khan told DEALSTREETASIA in an interview.

Khan took over the reigns of IntelleGrow in November last year from GE where he was the Head of Business Development, and has charted out an aggressive growth strategy for the non-banking finance company.

“We are a profitable NBFC – we are not a fund. So we can money from investors in the form of equity and leverage up from there and then lend to our customers. We classify ourselves as lenders to early stage and high growth companies. We also do lending to SMEs and mid-corporates, that is a big opportunity for us,” said Khan.

Incubated by Intellecap under a permanent capital structure, IntelleGrow is supported by Shell Foundation, MSDF, Omidyar Network, Triodos and Developing World Markets apart from lenders such as Symbiotics, Calvert Foundation and OPIC.

The company is already in talks with domestic as well as foreign investors for the $100 million capital which it hopes to raise in the next three to four months.

in June last year, Venture debt financier Jain Sons Finlease Ltd., which funds social enterprises through its brand IntelleGrow, had raised $20 million in equity and long term debt. The new investors including Omidyar Network, Triodos Investment Management, Developing World Markets, Calvert Foundation and Overseas Private Investment Corp participated in the round.

Prior to that, in February 2016, it had raised $8 million from Calvert Foundation, a US-based community development financial institution.

“The strategy that we’re adopting and the targets that we’ve set for ourselves is to double every year. So next year we want reach our AUMs to double from where we are. Last year we ended at Rs 320 crore and so we want to reach Rs 640 crore and the following year double that as well. To get there, we pride ourselves in product innovation,  and work with our clients to develop new products and provide them with all their liability needs. We want to become the liability market place for all our customers,” said Khan.

At present, the company has 160 companies as its clients, of which 66 were new clients added in FY17 (April 2016-March 2017). In the current financial year, Intellegrow plans to add 120 new clients and take the total number to 290 customers.

“The reason why that is not doubling is because we want to also work with our existing clients, giving them larger cheque sizes, giving them repeat loans, different products. It’s not a linear relationship, we’re looking to add 10 clients a month,” said Khan.

To cater to the growing needs of its clients, IntelleGrow is also in the process of raising an alternate investment fund (AIF) of around $20 million to extend longer term loans to its clients.

“The plan for that is that Intellegrow will be the fund manager, we are going to go out and raise capital from a different class of investors not our equity investors, but investors who are looking for looking for exposures to SMEs but a different kind of product exposure. For us its a relatively easy extension to what we doing right now,” Khan explained.

“We have already started the discussions, which is in parallel with our equity discussions but it’s a different pool of capital. So, the plan is to have this in place by Q3 (Oct-Dec),” he added.

With larger pools of funds the company is also looking to increase the sizes of cheques that it cuts. At present, IntelleGrow lends between Rs 2 crore and Rs 10 crore from its balance sheet, which has gone up to Rs 15 crore through syndication.

“One reason for why we are going out to raise more capital, as our customers grow, their demand for more capital also increased. Clearly cheque sizes will be a function of our capital base and also the demand from our customers,” said Khan.

Venture debt is emerging as a popular funding options for firms that are looking for interim investments without diluting equity. Within India companies like Temasek-backed Innoven Capital and domestic venture debt fund Trifecta Capital compete with IntelleGrow in this space.

Recently, InnoVen Capital announced that it had extended about $37 million to 17 companies in the March quarter, as against $16 million in 13 companies in the three months to December, taking its total investment in the last fiscal to $85 million in 45 companies, including 31 new ones.

Also Read:

Exclusive: IntelleGrow plans to raise new $20m debt fund targeting Indian SMEs

Temasek-backed InnoVen Capital doubles India venture debt investments in March quarter