IntelleGrow Finance in talks with global investors to raise an additional Rs 150- Rs 200 crore
Venture debt lender IntelleGrow Finance is in talks with a number of global investors to raise a fresh round of funding.
The Mumbai-based non-banking finance company (NBFC) has held discussions with some of the biggest international development agencies, including International Finance Corp, the private lending arm of the World Bank and Germany’s KfW and DEG.
Sanjib Jha, chief executive of IntelleGrow, confirmed that the NBFC was in the market to raise a new round of funding, but refused to disclose the names of the potential investors, citing the early stage of negotiations.
“There is a constant need for capital, given that we lend to early-stage enterprises that rarely get financing from the banks,” said Jha. Emails sent to IFC, KfW and DEG did not elicit any response at the time of going to press.
If successful, this will be Intelle-Grow’s second round of institutional funding in the last three months. In March earlier this year, ET was the first to report that the company had raised Rs 28 crore from Omidyar Network, the philanthropic investment firm established by eBay founder Pierre Omidyar and existing backer Michael and Susan Dell Foundation.
IntelleGrow, which provides debt, ranging between $100,000 (about Rs 60 lakh) and $600,000 (about Rs 3.6 crore) to early-stage ventures that cater to India’s poor, counts companies such as renewable energy venture Husk Power, low-cost ATM manufacturer Vortex Engineering and low-cost hospital chain Vaatsalya Healthcare Solutions in its portfolio.
The development highlights the growing interest for risk capital in financial services ventures that lend to the country’s micro, small and medium enterprises sector, which, according to industry data, accounts for 40% of the country’s overall industrial output, exports and employment.
Recent private equity transactions that have taken place in the space include Matrix Partners’ undisclosed investment in Chennai-based Five Star Business Credits in February, while Rajasthan-based AU Financiers raised about Rs. 126 crore from IFC, Warburg Pincus and ChrysCapital in April.
Additionally Bangalore-based Vistaar Finance is also believed to be in the final stages of raising a fresh round from fresh investors.
“It is critical to understand the MSME businesses, which will be a value driver for these NBFCs,” said Niren Shah, managing director at Norwest Venture Partners, which has invested in Ratnakar Bank and Shriram City Union Finance that have a large exposure to Indian MSMEs.
IntelleGrow is looking at raising a mix of long-term debt and equity in the new round.
“We’re looking at equity funding of between $10 million (Rs. 60 crore) and $15 million (Rs. 90 crore), with the rest as debt,” said Jha.
The NBFC will look to fund at least 100 ventures within the next 12 months. At present, it lends to about five startups every month. Almost half its total portfolio features ventures that are between six and 18 months old.