Veritas Finance, a Chennai-based non-banking financial services company that lends to micro and small enterprises, has raised Series B equity funding of Rs 120 crore. This includes investment of Rs 65 crore from CDC Group, a development finance institution from the UK, and Rs 45 crore from Lok Capital. Existing investors P Surendra Pai and his wife also participated in the latest round. Veritas raised its first institutional funding in April 2016 from Lok Fund II (Sarva Capital) and Caspian Impact Investment Adviser. The fresh round of funding will bolster product innovation, expansion to newer states such as Andhra Pradesh and Telangana and deepen the company’s presence in existing states and Union Territories. “We will be starting our operations in Andhra Pradesh and Telangana by April 2018. We hope to target about 5,000 customers and have an loan order size of Rs 100 crore,” Arulmany, founder, told FE. “The CDC Group has committed to further invest `35 crore separately in debt, taking the total fund raised by Veritas Finance to Rs 155 crore in this round,” he said. A large part of the investment by Lok Capital has been made through its third fund, Lok Capital Growth Fund.
Veritas that started in late 2015 now has over 12,000 customers on board and the company aims to grow its loan book to Rs 1,000 crore by FY19. For March 2018, it expects to have a loan book of Rs 330 crore. While MSME lending offers large market potential, there are very few lending models that are exclusively focused on small businesses. “As a specialised lender in the MSME segment, we are constantly looking at product innovation and building superior credit assessment methods. Through this round of funding, besides expansion, we will also strengthen our technology play which will help us achieve higher productivity and bring down costs of servicing micro-businesses,” Arulmany said.
On Series B investment in Veritas, Nikhil Balaraman, south Asia director at CDC India Advisors, said: “Our investment in Veritas underlines our commitment to back companies with a strong development impact philosophy and business models that support financial inclusion for India’s disadvantaged. Financial services for the MSME space in India is a huge area, but is also hugely under-served. The team from Veritas stands out for its dedication and experience and we’re committed to help them reach more challenging geographies, giving their customers financial tools and advice to prosper. CDC will also support Veritas’ use of technology to reach even more customers.”
Since its inception in 2004, Lok Capital has built an enviable and a diverse financial inclusion portfolio.