Hyderabad-based IKF Finance on Thursday said it has raised Rs 1,465 crore ($171.7 million) in a round led by Norwest, with participation from early backer Motilal Oswal Alternates.
The investment, a mix of primary and secondary transactions, marks IKF’s largest fundraise to date and will be used to deepen its reach across India’s underserved segments.
Founded in 1991 by VGK Prasad, IKF provides secured retail loans, including used commercial vehicle loans, MSME loans, and affordable housing finance through its subsidiary, IKF Home Finance.
The company operates across nine states and has a loan book of Rs 6,700 crore as of March 2025.
Through the raised funds, IKF Finance aims to invest in its distribution, technology, and people.
Norwest, which has backed several Indian financial services companies, including Five Star, Mintifi, and Vastu Housing, has invested over $100 million in this round.
Motilal Oswal Alternates, which first invested in IKF in 2015, has doubled down on the firm through its Fund IV.
“The company is now poised to be a multibillion-dollar lending franchise over the next five years,” said Vinit Mehta, MD and Head of BFSI Investments at MO Alternates.
Less than 10% of MSME companies in India have access to formal credit, creating significant opportunities for financial institutions.
The fundraising comes as global and domestic investors ramp up bets on India’s credit ecosystem, particularly in segments like MSME lending, where formal credit penetration remains low.
IKF Finance joins other companies in the NBFC space that have recently raised funding. In March, Dutch development bank FMO disclosed its plans to invest $12 million in Dvara KGFS, while the International Finance Corporation (IFC) is likely to invest up to $170 million in Indian shadow bank SMFG India Credit Company (SMICC).
Saarathi Finance, another MSME-focused NBFC in India, is known to have initiated talks with a host of private equity firms such as Paragon Partners, TVS Capital Funds and Evolvence India, alongside impact investor Lok Capital, sources told DealStreetAsia in January. Last year, Finova Capital, a Jaipur-based non-banking financial company (NBFC), raised $135 million in a Series E round of funding from Avataar Venture Partners, Sofina, and Madison India Capital.
