Veritas Finance raises 120 Cr Series B Equity Funding from CDC Group and Lok Capital
Veritas is a specialised lender to the MSME segment and has built a credible loan portfolio in 2 years; targets loan book of Rs. 1000 crores by FY19.
Veritas Finance, a Chennai-based financial services firm that lends to micro and small enterprises, today announced raising total Series B equity funding of Rs 120 crores. This includes investment from Lok Capital and an Rs 65 crores investment from CDC Group plc, the UK’s Development Finance Institution. Existing investors Mr. and Mrs. P. Surendra Pai have also participated in this 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 like Andhra Pradesh and Telangana and deepen Veritas’ presence in existing states and union territories.
According to a report by International Financial Corporation (IFC), small businesses in emerging markets, such as India, are facing a funding gap of $2 trillion and avail only 5 percent of institutional lending. While MSME Lending offers large market potential, there are very few lending models that are exclusively focused on small businesses, particularly those in the sub-5 lakh ticket sizes.
Founded in 2015 by Arulmany, Veritas meets a spectrum of MSME credit needs; short term loans for working capital, medium term loans for business expansion and long-term loans for asset creation. The company has registered significant growth. From a standing start in late 2015, Veritas now has over 12000 customers on board and the Company aims to grow its loan book to Rs.1000 crores by FY 19. Veritas currently operates out of 60 branches and 97 micro centers in the five states and Union Territories of Tamil Nadu, Puducherry, Karnataka, West Bengal and Odisha.
Arulmany, founder of Veritas said, “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 in turn help us achieve higher productivity and bring down the cost of servicing micro-businesses. We are pleased to partner with reputed institutions and leaders in the impact investment space, like CDC Group and Lok Capital, whose mission is to support financial inclusion initiatives like ours and make finance affordable and accessible to the informal segment.”
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 ever more challenging geographies, giving their customers the financial tools and advice to prosper. CDC will also support Veritas’ use of technology to reach even more customers.”
Venky Natarajan, cofounder and partner, Lok Capital said, “Lok has witnessed the journey of Veritas from being an idea in 2015 to reaching more than 12,000 customers today. During this time, our confidence in the senior team’s execution abilities has grown immensely. The company’s undiluted focus on the target segment, clear focus on credit quality, excellent traction in garnering debt lines, demonstrated product innovation, have strengthened our belief that the company will emerge as a player worthy of emulation in the SME lending space. We are also glad to partner with CDC in this round, a well-aligned investor with common goals in financial inclusion”. This round of funding from Lok, counts investment from both its Fund II – Sarva Capital and Fund III – Lok Capital Growth Fund.
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