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Debt financing firm IntelleGrow lines up Rs200-cr debt fund

The firm, which operates as a nonbanking finance company (NBFC), provides debt for working capital needs of early-stage, high-risk small and medium enterprises, typically, in the social impact sector.

, ET Bureau|
Updated: Jul 13, 2017, 12.01 PM IST
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As an NBFC, IntelleGrow offers SMEs, working capital financing including invoice discounting, warehouse-receipt financing, and purchase order financing among others.
As an NBFC, IntelleGrow offers SMEs, working capital financing including invoice discounting, warehouse-receipt financing, and purchase order financing among others.
MUMBAI: Intellecap Group-promoted specialty debt financing firm IntelleGrow is looking to launch a Rs 200-crore debt fund by the end of this year.

The firm, which operates as a nonbanking finance company (NBFC), provides debt for working capital needs of early-stage, high-risk small and medium enterprises, typically, in the social impact sector.

"We are looking to set up a debt fund business.IntelleGrow will be the fund manager and sponsor for the fund," CEO Akbar Khan told ET. The fund, which will operate as another business under IntelleGrow, will function as a category-II alternative investment fund unlike the firm which is an NBFC.

An Alternate Investment fund (AIF) is a Sebi-regulated investment vehicle, which aims to pool in funds for investment in the form of venture capital, private equity, hedge funds, and real estate investment trusts, among others. The firm is a part of Aavishkaar-Intellecap group and counts the Michael and Susan Dell Foundation, Omidyar Network, fund manager DWM, Triodos Bank, Shell Foundation and Omidyar Network among its investors.

The firm is not looking to raise capital for the debt fund from existing investors and has been in talks with various global and domestic players including banks, family offices and sovereign wealth funds. As an NBFC, IntelleGrow offers SMEs, working capital financing including invoice discounting, warehouse-receipt financing, and purchase order financing among others.

Through the fund, IntelleGrow is looking to extend longer term loans to its clients. "We typically offer working capital loans for 24-36 months with EMI-based repayments. (Through the fund) we would offer more long-term (loans) ranging 24-48 months (with a possible) bullet payment structure," explained Khan. IntelleGrow typically invests between Rs 75 lakh and Rs 10 crore with an average ticket size of Rs 2 crore for firms.

But the fund will see the firm opting for higher ticket sizes that would start at Rs 2 crore.

"We are looking to double the assets under management, not necessarily by increasing the number of deals but rather by increasing ticket sizes," said Khan. IntelleGrow ended FY17 with about Rs 315-320 crores in assets under management and is looking to end FY18 with atleast Rs 640 crores in assets under management.

With 2016 turning out to be a cautious year for venture capital firms, venture debt has emerged as an attractive asset class for startups and SMEs looking for financing without having to dilute equity stakes.

Temasek-backed Innoven Capital, the largest venture debt player in the space, along with domestic venture debt fund Trifecta Capital compete with IntelleGrow, all having ramped up their pace of lending over the past year.

InnoVen Capital doubled its deployment pace in FY17 to $85 million and is eyeing the $100 million mark for FY18.

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47 deals in six months, claims venture debt firm IntelleGrow

47 deals in six months: Claims venture debt firm IntelleGrow

IntelleGrow raises Rs 28 cr from Omdiyar Network, Dell

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