A group of investors, including Premji Invest, Norwest and Lok Capital, have invested up to Rs 1,000 crore ($106 million) in Vegafin, an MSME lending platform led by ICICI Bank executive Bijith Bhaskar.
The funding comes as the startup looks to acquire a majority stake in Bizloan, a Gurugram-based non-banking financial company (NBFC) specialising in secured loans to micro, small and medium enterprises (MSMEs). A part of the capital will also go towards platform development and expansion.
Vegafin aims to use technology and AI to assess loan applications and speed up lending decisions while building an on-ground network to reach more MSME borrowers.
India’s MSME sector plays a key role in the economy but continues to face a significant credit gap, estimated at more than Rs 30 trillion.
“There is a clear need for a pan-India player with a strong MSME focus, efficient cost of service and ability to price risk accurately,” Bhaskar, founder, CEO and managing director of Vegafin, said in a statement.
“Our platform aims to fill this need by leveraging technology to provide accessible and affordable secured credit for various requirements across the lifecycle of MSMEs,” he added.
The acquisition of Bizloan is expected to help Vegafin process loans faster, improve borrower selection and reduce operating costs as it expands lending to underserved MSMEs.
Bizloan operates across five states with over 35 branches and about Rs 235 crore in AUM. Its existing investors include the Michael & Susan Dell Foundation, BLinC Invest and Mohan Enterprises. While BLinC Invest will continue to hold its stake, Mohan Enterprises and the Michael & Susan Dell Foundation will exit.
