UK’S CDC Group likely to invest over Rs100 cr in Veritas Finance
CDC Group Plc, the UK government’s development finance institution, is in advanced talks to invest over Rs100 crore in Veritas Finance Pvt. Ltd, which lends to micro and small enterprises, said two people aware of the development.
Chennai-based Veritas was registered as a non-banking financial company (NBFC) by the Reserve Bank of India in October 2015.
In December, Mint reported that Veritas was in the market to raise funds.
The company started with an initial capital of Rs13.60 crore and raised additional equity of Rs30 crore from Lok Capital and others, including Caspian Impact Investment Adviser, in a series A round of fund-raising in 2016.
“Veritas has been in talks with CDC Group and the deal is expected to be closed soon. They are waiting for a few approvals,” said one of the two people cited above, requesting anonymity as he is not authorized to speak with reporters.
The company will use the funds to increase its loan book and its network, he added.
In December, D. Arulmany, managing director and chief executive at Veritas told Mint that the firm was looking to close fiscal year 2016-17 with a loan book of Rs100 crore.
Veritas focuses primarily on providing medium-and longterm credit to micro enterprises.
The firm’s average loan size is Rs4 lakh and its typical customers—small and micro entrepreneurs who run bakeries, restaurants and provision stores—earn Rs25,000 to Rs60,000 a month, with no prior exposure to formal business finance.
Emails sent to D. Arulmany, managing director and chief executive at Veritas, did not elicit any response.
CDC does not comment on specific transactions, said Srini Nagarajan, head, South Asia, CDC Group, in an email response.
Delhi-based NBFC Aye Finance Pvt. Ltd, which operates in the same space as Veritas Finance, raised about Rs70 crore in November in a round of funding led by LGT Impact Ventures.
Existing investors SAIF Partners and Accion also participated.
CDC Group has been an active investor in private lenders, focusing on providing financial services to bottomof-the-pyramid customers and to small businesses.
In January 2016, CDC invested $50 million (approximately Rs330 crore) as tier II capital in microfinance institution Janalakshmi Financial Services Pvt. Ltd, an erstwhile microfinance institution that is now a small finance bank.
CDC’S other microfinance bets in India include the likes of Equitas Holdings Ltd, Ujjivan Financial Services Ltd and Utkarsh Micro Finance Ltd.
It invested $16 million in Equitas in 2013.
Utkarsh raised $21 million in round of funding led by CDC and Lok Capital in 2014. In 2016, CDC participated in Ujjivan’s Rs600 crore fundraising. Equitas, Ujjivan and Utkarsh in September 2015 received the Reserve Bank of India’s in-principle approval to convert into small finance banks.
D. Arulmany, MD and chief executive of Veritas.