Credit and financing for MSMEs: Collateral-free MSME loan provider Kinara Capital said on Tuesday it had raised 380 crore rupees (nearly $50 million) in the latest funding round led by new investors – global investment manager Nuveen based in Chicago with over $1.3 trillion in assets under management (AUM) and Dutch microfinance fund ASN Microkredietfonds, advised by impact-focused investment manager Triple Jump. The company is offering a loan of Rs 1 lakh to Rs 30 lakh within the 24-hour disbursement window with an average note 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 almost Rs 1,300 crore AUM in March 2022 which increased by around 45% from the period of the previous year.
“It’s about the growth capital to deploy to deliver new products, expand the branch network, leverage debt so that we have a broad runway for the next 18 months. We’re seeing customers looking for more products flexible, short-term, on-demand and integrated. So we are working on new technologies to offer more loans to our small business customers. In terms of branch network, we will expand it from the current 90 cities to 125 by the end of this quarter,” Hardika Shah, Founder and CEO of Kinara Capital told Financial Express Online.
The new round brings the total investment raised by the company, including equity and debt, to around 990 crore rupees (nearly $130 million). The company had raised around Rs 607 crore ($79.5 million) until October last year when it secured Rs 70 crore funding from German microfinance fund Visions GmbH (IIV) with backing from impact investor Agents for Impact (AFI), according to the data. from Crunchbase.
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Kinara has a vernacular user-friendly digital platform myKinara app as well as home-based customer service to provide access to credit to MSMEs. Borrowers from more than 300 sub-sectors of manufacturing, trade and services can avail loans online through the platform. “Adopting the digital self-decision solution has helped us disburse loans faster within 24 hours. We are looking to double AUM this financial year to around Rs 2,500-2,600 crore as customers come out of Covid and there is huge buzz at grassroots level in terms of growth prospects based on consumer demand” , Shah added. In terms of disbursements, the company expects a 2.5 to 3 times growth this year to around Rs 2,000 crore and Rs 10,000 crore in the next three years.
Kinara’s net non-performing asset (NPA) ratio is around 3%, while “we have seen that with our last mile distribution and collection infrastructure, we have been able to be at the same collection efficiency than before Covid,” Shah said.
With the new round, Nuveen’s Managing Director and Co-Head of Private Equity Impact, Rekha Unnithan, and Nuveen’s Director of Private Equity Impact, Stephen Lee, will join the Board of Directors of Nuveen. Kinara. As shareholders, Nuveen and Triple Jump will support Kinara’s continued growth and continued development of their best-in-class ESG and impact management system, the company said.
“By adopting a digital-first approach without compromising on human customer service, Kinara has outclassed others with its ability to solve problems for MSMEs in India. With a decade of proprietary data, Kinara has perfected its qualification processes and turnaround times,” Unnithan said in a statement.