This marks the company’s largest fundraise, comprising primary capital infusion and secondary stake sales, IKF Finance said on May 15.
“This is our largest fundraise to date and a key milestone in our journey to expand access to inclusive, flexible financial solutions for underserved communities,” founder and chairman VGK Prasad said.
Moneycontrol was the first to report in February that IKF Finance was in advanced talks with Norwest and existing investors to raise a $70–80 million in primary capital.
The round was subsequently upsized, as institutional investors including Motilal Oswal Alternates, TIAA and Accion increased their stake in the company.
This culminated in the final closure at ₹1,465 crore (around $175 million), with Norwest contributing over $100 million alone.
The fresh funds will be deployed to scale IKF’s operations, expand its footprint, and invest in technology and talent, the firm said in a statement on May 15.
Founded in 1991 by VGK Prasad, IKF Finance operates in nine Indian states and focuses on secured retail lending — primarily used commercial vehicle and MSME loans — serving underserved customer segments like small fleet operators and first-time buyers.
Its housing finance arm, IKF Home Finance, provides affordable housing loans and loans against property.
Prasad’s daughters K Vasumathi Devi and Vasantha Lakshmi lead IKF Finance and IKF Home Finance, respectively, as managing directors.
Norwest’s India head Niren Shah said the firm was backing IKF for its “strong governance, consistent track record, and commitment to financial inclusion.
“Backed by an experienced leadership team, strong governance, and a consistent track record, IKF is well positioned to continue meeting the needs of Indian borrowers. We have a proud legacy of partnering with founder-led, professionally managed financial services institutions, and we are honoured to support IKF as it embarks on this promising new chapter,” he said.
MO Alternates’ BFSI head Vinit Mehta said the company, with its exemplary credit culture at its core, has demonstrated consistent growth and profitability across cycles and is now poised to be a multibillion-dollar lending franchise over the next five years.
Cashing in on vehicle finance and SME wave
This deal comes amid renewed investor interest in lending-focused NBFCs, particularly those targeting MSMEs and underserved segments.
In the past year, firms like Mintifi, Flexiloans, and Finova Capital have also secured large cheques from global backers such as Avataar, Prosus, and Ontario Teachers’ Venture Growth.
Over the past three years, IKF Finance’s AUM has grown at a compound annual growth rate (CAGR) of 39%, rising from ₹1,777 crore in March 2021 to ₹4,811 crore in March 2024, Care Ratings data shows.
This represents a 53% year-on-year jump, which increased to Rs 5,386 crore as of September 30, 2024.
In FY24, the company disbursed ₹3,145 crore in loans, marking a 53% increase over the previous year. It ended the fiscal with a profit after tax (PAT) of ₹102 crore on a total income of ₹586 crore, a 64% and 55% year-on-year growth, respectively.
As of September 2024, the company reported gross NPA of 2.25% and a net NPA of 1.75%.