Jaipur-based lending startup Finova Capital is in late-stage talks to raise INR 800 Cr through a combination of new equity funding and share sales from existing investors. Sources familiar with the development have said the fundraising round will be led by new financial backers including Avataar Venture Partners, Madison India Capital and Belgian investment firm Sofina. Existing investors of Finova Capital are also expected to participate.
Founded in 2015, Finova Capital provides business and home loans to underserved customers in semi-urban and rural areas across India. With a strong foothold in states like Rajasthan, Madhya Pradesh and others, the digital lender has established over 400 branches and focuses on ticket sizes between INR 3-25 lakhs.
In the financial year ending March 2024, Finova Capital saw significant growth with operating revenues growing 59% to INR 529.3 Cr and net profit rising 71% to INR 151.5 Cr compared to the previous fiscal year. This robust performance indicates the rapid expansion of Finova's lending operations.
The proposed funding round comes at a time when NBFCs catering to under banked MSME and consumer segments are witnessing increased investor interest given the large unmet credit demand. Finova Capital had previously raised $65 million from global investors in 2022 and around INR 260 Cr from institutional backers in 2020 to fuel its lending business growth.
If successful, the latest funding raise will provide a capital infusion to strengthen Finova Capital's balance sheet as it continues powering ahead to fulfill financing needs of individuals and small businesses across the country. The deal is also a vote of confidence for innovative digital lenders tackling financial inclusion in India's tier 2/3/4 locations.
