Credit and financing for MSMEs: Collateral-free MSME lender Kinara Capital announced on Tuesday that it had raised Rs 380 in its latest funding round led by new investors – Chicago-based global investment manager Nuveen, which has over US$1.3 trillion (AUM) in assets under management crore (nearly $50 million). and Dutch microfinance fund ASN Microkredietfonds, advised by impact investment manager Triple Jump. The company offers a loan of Rs 1,000 to Rs 30,000 with an average ticket size of Rs 10,000 within the 24-hour withdrawal window. It has disbursed around 70,000 loans totaling Rs.3,000 crore to 40,000-45,000 MSMEs since its inception in 2011, with assets under management of nearly Rs.1,300 crore as of March 2022, a growth of around 45 per cent over the same period last year .
“This is the growth capital that must be deployed to offer new products, expand the store network and raise debt to give us a great runway for the next 18 months. We see that customers are looking for more flexible, short-term on-demand and embedded products. That’s why we’re working on new technology to offer more loans to our small business customers. In terms of the branch network, we would 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 company’s total investment, including equity and debt, to around Rs.990 billion (nearly US$130 million). The company had raised around Rs.607 billion (US$79.5 million) by October last year when it secured Rs.70 billion in financing from Germany-based Visions GmbH (IIV) Microfinance Fund with support from the Impact investors Agents for Impact (AFI) secured, according to Crunchbase data.
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Kinara has a vernacular myKinara App digital platform and door-to-door customer service to provide access to credit for MSMEs. Borrowers from over 300 sub-sectors in manufacturing, trade and services can avail online loans through the platform. “The introduction of the digital auto-decisioning solution has helped us to disburse loans faster within 24 hours. We aim to double assets under management to around Rs2,500-2,600 this financial year as clients come out of Covid and based on consumer demand there is definitely a lot of buzz in terms of growth prospects,” added Shah. In terms of payouts, the company expects to grow 2.5-3 times this year to around Rs 2,000 crore and Rs 10,000 crore in the next three years.
Kinara’s non-performing asset (NPA) ratio is around 3 percent, while “we’ve seen that with our distribution and collection infrastructure, we could achieve the same last-mile collection efficiencies as we did before Covid,” Shah said.
With the new round, Nuveen’s Managing Director & Co-Head of Private Equity Impact, Rekha Unnithan, and Nuveen’s Director of Private Equity Impact, Stephen Lee, will join Kinara’s Board of Directors. As shareholders, Nuveen and Triple Jump will support Kinara’s continued growth and advancement of its industry-leading ESG and impact management system, the company said.
“Kinara takes a digital-first approach without compromising on human customer service and has surpassed others in its ability to address the pain points of MSMEs in India. With a decade’s worth of proprietary data, Kinara has perfected its qualification processes and turnaround times,” Unnithan said in a statement.