Accion and SAIF Partners Co-Invest in India-Based Aye Finance

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Feb 23, 2015

Feb 23, 2015

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$1 million investment will address growing need for capital in India’s MSME ‘middle market’

WASHINGTON,Feb. 23, 2015— SAIF Partners and Accion today announced co-investments in Aye Finance, anIndia-based lender that will serve thousands of profitable micro, small, and medium enterprises (MSMEs), which are often locked out of both traditional microfinance and commercial capital. Accion made its investment through Venture Lab, a$10 millioninitiative dedicated to providing seed capital and management support to innovative startups expanding financial access to the poor and underserved. SAIF provides seed, early, and growth stage capital for emerging companies inIndiaandChina. For over 13 years, it has been investing inIndia, and its portfolio includes a number of financial institutions. SAIF continues to partner with strong teams and pursue innovative business models across sectors and stages of investments.

“MSMEs represent a highly underserved ‘missing middle’ market inIndia,” said Accion President and CEOMichael Schlein. “Too small for commercial finance and too large for traditional microfinance, these entrepreneurs must make do without the working capital they need to expand their businesses, buy bulk materials, or hire new employees. Aye Finance will address that ‘missing middle,’ providing borrowers with the capital that all businesses need, no matter their size. Ultimately, this access to credit will help more than the MSMEs – it will also benefit the clients and employees who rely on these entrepreneurs, and the local economies that grow along with successful enterprises.”

The debt gap for MSMEs inIndiais estimated to be$198 billion, and is increasing at 11 percent per year, according to a report by Intellecap and the International Finance Corporation. Aye joins a number of actors attempting to serve this sector, alongside the Indian Government’s renewed focus on supporting MSMEs. By formalizing the lending process and offering secured loans as low as$1,000at market rates, Aye Finance will address an important need, and helpIndia’sburgeoning economy on its growth path.

Aye Finance, based in northernIndia, was founded by two veteran bankers,Sanjay SharmaandVikram Jetley. With the majority ofIndia’slending based in the southern states,India’snorthern region is marked by sizable levels of poverty and an unorganized sector of informal moneylenders charging exorbitant interest rates. Aye has seen tremendous demand for its services since launch, opening 4 branches in the last 6 months, and has already financed over 300 micro businesses. Aye Finance’s clients represent a number of industries – including shoemaking, garments, textiles, leather, auto components, and others.

“By getting to know these businesses that ‘cluster’ together in specific neighborhoods or districts in urban areas, we believe Aye can uniquely acquire and assess customers in a low cost manner that mainstream financial institutions have so far found uneconomical. This is a subtle, but powerful innovation that will transform the approach to small businesses’ finance,” saysVishal Sood, Managing Director, SAIF partners.

Sanjay Sharma, Managing Director, Aye Finance Pvt Ltd said, “The 40 million organized micro-businesses are the fastest growing industrial segment, nourished by the aspirations of the Indian working classes. We offer much-needed loans and financing to micro-businesses through our insightful, segmented origination processes. Our use of new-age mobile and cloud computing lowers the delivery cost and our understanding of industry segments continue to attract a rapidly growing and loyal customer base.”

About SAIF Partners

SAIF Partners is a leading venture capital firm with over$4Bunder management. SAIF provides seed, early, and growth stage capital for emerging companies inIndiaandChina. SAIF began partnering with entrepreneurs inIndiain 2002 and has backed over 40 companies since then including MakeMyTrip, JustDial, PayTM, BookMyShow, and Urbanladder. SAIF’s financial services portfolio spans across established businesses such as NSE, Edelweiss and Karur Vysya Bank as well as emerging tech-enabled ventures such as Capital Float. For further information, visitwww.saifpartners.com

About Aye Finance P Ltd

Aye Finance (Aye) is a young modern organization that believes in delivering customer centered and yet affordable finance facilities to its rapidly growing clientele of small and micro businesses acrossIndiawhich are presently locked out of the financial system. The company aspires to build a large scale business in a sustained and profitable manner, while attracting a lasting social dividend.

Use of new age technology with low fixed overheads and an innovative credit appraisal methodology helps the company build a quality financial portfolio with optimal costs. The company’s spirit of innovation and achievement is an apt foil to the small and micro Indian businesses that are famous for their frugal innovation or ‘jugaad‘.

Managed by experienced professionals from banks and some of the best microfinance organizations inIndia, Aye brings the best of both the worlds – sound international business practices and a deep understanding of microenterprises inIndia.For further information, visitwww.ayefin.com

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