BENGALURU : MICRO lending start-ups Five Star Finance and KreditBee have raised nearly $300 million this week as investors look to cash in on small businesses and small ticket size personal loan markets in India. Chennai-based NBFC Fivestar Finance attained the unicorn status after raising $23 4 million from a consortium of global and homegrown investors in which new investors like KKR India, TVS Capital also participated. “The company is a true pioneer in the market having supported the growth of MSMEs for decades, playing an important role in India’s economy.
Five Star is a terrific example of the type of solutions-oriented business that KKR looks to support through its Global Impact strategy and in India, and we look forward to working with Lakshmipathy and his team to build on Five Star’s long-term success,” said Gaurav Trehan, Partner at KKR.
The NBFC start-up said that it aims to bridge the funding gap in the MSME industry with 60 million such businesses , employing more than 125 million people and contributing to 30 per cent of the country’s economy. Similarly, KreditBee also announced the closure of its $145 million Series C funding round which included a fresh capital raise from $70 million led by Motilal Oswal Security and New Quest Capital Partners.
This also marks the biggest fund raise by the lending startup since the onset of Covid-19 pandemic, demonstrating the growing investor confidence in the microfinance ecosystem. The microfinance sector in India reported a strong recovery in the December-ended quarter of FY21 with disbursements growing by 80 per cent sequentially with the government allowing loan restructuring for borrowers to tide over the pandemic stress. “The requirements of the average middle class Indian can only be met by a multitude of lending products,” said Amit Gupta, founding partner at NewQuest Capital Partners.