LivFin Raises Equity From German Major DEG For Further Expansion

LivFin, an SME-focused supply chain Fintech firm has successfully raised a fresh round of equity capital to the tune of $5 million from German development finance institution DEG to help it further expand the operations and reach the AUM target of $40 million by March 2020.

With the infusion of capital, the equity base of LivFin will be doubled, allowing it to raise additional debt and register a significant growth in the total AUM, while for DEG, it is for the first time joining a Fintech startup in India, and amplifies its efforts towards financial inclusion in the country by enabling more small businesses to get access to credit.

LivFin, in its second year of operation, is promoted by the Family Office of Rakesh Malhotra, who has also promoted the SAR Group, with business interests in energy storage (LivGuard), water purification (LivPure) and has recently forayed in the emerging e-mobility market in India.

“DEG’s equity investment provides LivFin multiple positives: it’s a validation of our business model and recognition of our rapid growth, our tech-based credit and operations processes, and high governance standards,” said Rahul Chander, MD & CEO, LivFin.

“It also recognizes our objectives as a financier to the un-banked/partially banked segments of the Indian economy. The investment will be a boost to our planned growth over the next 12-18 months, and makes LivFin a serious player in the supply chain finance space in India” he added.

LivFin has already built up a live book of over $20 million and disbursed over $150 million in aggregate. It works with anchors and customers across multiple industries. It has secured loan funding from nine lenders totalling $14 million and is targeting an AUM of $40 million by March 2020. LivFin has also recently started its first co-lending structure with a large non-bank finance company, where the co-lender provides 80 per cent of the funding for a set of borrowers, and LivFin provides the balance 20 per cent, with the entire management of the borrowers being done by LivFin using its tech for a fee. These structures will allow LivFin to further leverage its equity to provide financing to a significantly larger customer base.

Banks and most large Non-Bank Finance Companies in India usually require collateral as security to provide finance to small businesses. Post demonetization in 2016 and the introduction of GST (India’s VAT system) in 2017, most small businesses which were largely un-banked, or at most partially banked, found their usual source of short term credit from local money lenders drying up. LivFin’s business is focused on providing unsecured short term working capital finance to these businesses, working together with mid-sized corporates, who act as “Anchors”, for whom these small businesses act as either their suppliers for inputs or as distributors for their finished products.