Chennai-based small business lender Veritas Finance Thursday announced that it has raised about $48.7 million (Rs 350 crore) in Series E funding from new investor Kedaara Capital, along with the existing investors including Norwest Venture Partners (NVP), Lok Capital Growth Fund and the family of anchor investor P Surendra Pai.
Veritas intends to use the corpus to further penetrate into existing markets to augment the capital needs of MSMEs.
“In a diverse nation like ours with disparate cultures, environment and opportunities, the significant role that informal micro-enterprises play in building the economy can never be ignored and their vital contribution has been recognized by everyone. However, several reasons, starting from their unorganized nature of these enterprises, their size, location, banking habits etc., have hindered them in accessing debt and they continue to face challenges,” D. Arulmany, MD & CEO, Veritas Finance said.
Promoted in 2015 by Arulmany, Veritas Finance is a non-banking financial company (NBFC) focused on MSMEs. It has created a loan book of Rs.1,308 crores as on 29 February 20 with a customer base of 48,638 across eight states and one union territory, the statement added.
According to the industry experts, India is home to more than 60 million MSMEs who contribute to 45% of the exports and it forms the highest share of the employment sector in India, contributing around 69% to it.
“MSME lending is a largely underserved market requiring specialized risk management capabilities and we believe Veritas is well equipped to realize the market potential,” Nishant Sharma, co-founder and partner of Kedaara Capital, and Parin Mehta, managing director of Kedaara Capital said.
Other players operating in the space include IndoStar Capital Finance, Vistaar Financial Services, Indifi, Lendingkart, Aye Finance, LoanTap, AU Financiers, and Satya Micro Capital.
According to a recent disclosure, Dutch development bank FMO is considering extending a $30 million loan to Indian microfinance company Vistaar Finance Services. In January, venture capital firm A91 Partners invested about $20 million in small-business lender Aye Finance through a secondary sale of shares.
Last August, Lendingkart Technologies raised $30 million led by existing investors, including Fullerton Financial Holdings Pte Ltd, Bertelsmann India Investments and venture capital firm India Quotient.