Kinara Capital gets backing from UK, Dutch, US impact investors to provide collateral-free loans to MSMEs

Woman-founded fintech firm Kinara Capital has raised an equity round of Rs 200 crore, led by British International Investment (BII), the UK’s development finance institution and impact investor. Formerly known as CDC Group, BII supports the UK Government’s initiatives to create productive, sustainable and inclusive economies in Africa, Asia and the Caribbean markets.

Returning investors in the round include Nuveen, the Chicago-headquartered asset manager owned by US pension fund TIAA and Dutch impact-focused investment manager’s ASN Microcredit Fund. Nuveen has $1.1 trillion in assets under management as of June 2022 and operations in 27 countries. The funds managed and advised by Triple Jump provide financing for companies focusing on financial inclusion, affordable housing, missing middle finance (SMEs), and climate and nature. ASN Microcredit Fund is a listed and regulated microfinance investment fund working towards financial inclusion across geographies such as Africa, Asia, Europe and Latin America.

With its mobile application ‘myKinara App,’ the Bengaluru-based company wants to democratise access for MSMEs to formal financial inclusion. More than 300 MSME sub-sectors across manufacturing, trading, and services can digitally avail collateral-free business loans in the range of Rs 1-30 lakhs on the app. The company claims the app that leverages artificial intelligence and machine learning capabilities can take small business entrepreneurs from loan decision-to-disbursement within 24-hours.

 “BII seeks to invest in companies that demonstrate strong development impact capacity and offer tech-enabled innovative solutions with high potential for scalability. Kinara Capital meets these criteria, and we are especially excited by its commitment to helping to expand financial inclusion to MSMEs, including increasing women’s access to finance which in turn promotes women’s entrepreneurship. I am pleased that our flexible capital will help boost productivity within India’s MSME sector and facilitate entrepreneurial growth that will continue to transform the nation’s economy,” Manav Bansal, Managing Director and Head of India, BII, said.

With the fresh funds, the company aims to grow 5x by 2025 and reach an AUM of Rs 6,000 crore.

Kirana Capital claims to have disbursed Rs 3,500 crore to date across 75,000 collateral-free business loans to enable financial inclusion of the underserved small business entrepreneurs in India. Founded in 2011, and headquartered in Bangalore, Kinara Capital today has 125 branches serving MSMEs across 100 cities in India with a workforce of over 1,600 employees.

With a women-majority management team, Kinara Capital is qualified under the 2X Challenge – an initiative launched by the development finance institutions (DFIs) of the G7 to deploy and mobilise capital to support projects that empower women as entrepreneurs, business leaders, employees and consumers. The company has extended an automatic discount to all women entrepreneurs with its HerVikas program, which offers women entrepreneurs upfront discount on small business loans without property collateral.

“The combined expertise and capital infusion from BII, Nuveen and Triple Jump, will expand Kinara Capital’s offerings to meet the rising demand of the MSME sector in India. This year, India’s GDP growth has exceeded pre-pandemic levels signifying the resilience and growth prospects of small business entrepreneurs. With this support, we, at Kinara Capital, are further motivated to deliver on our mission of financial inclusion,” Hardika Shah, Founder & CEO, Kinara Capital, said.

The company aims to expand its reach to over 2,00,000 MSMEs in India in the next three years, which will help support over 1 million jobs in local economies and generate over Rs 3,000 crore in incremental income for small business entrepreneurs, it said.

Gaja Capital, GAWA Capital, Michael & Susan Dell Foundation (MSDF), and Patamar Capital are other investors in the company.

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