Aye Finance to File for IPO by October: From First Loan to ₹10,000 Crore in Microlending Success

BENGALURU: In March 2014, microlender Aye Finance gave its first loan to a small business making women’s footwear. Since then, it has helped over 900,000 small businesses, lending a total of ₹10,000 crore.

Sanjay Sharma, the founder and CEO of Aye Finance, is aiming for another big goal: going public. The microlender from Gurugram plans to file draft papers with the Securities and Exchange Board of India (SEBI) by late October or early November, preparing for a public listing by FY26.

“We will soon select a group of investment bankers and start the process. We expect to enter the market in the next financial year, FY25-26, probably in the first half,” said Sharma.

Aye Finance, which currently serves about 400,000 customers, focuses on lending to small and micro enterprises (SMEs). According to Sharma, the company is looking into a pre-IPO fundraise to allow current shareholders to exit.

Revenue

Revenue from operations grew 44.5% to ₹623 crore during FY23 while profit was ₹54 crore. For FY24, the company reported a 67% rise in revenue to ₹1,072 crore and a three-fold increase in profit to ₹161 crore.

Aye ended FY24 with assets under management (AUM) worth ₹4,500 crore, a 66% increase from the previous year.

“We aim to grow to ₹6,500 crore, which is slightly over 50% growth. Our profit is expected to grow from ₹160 crore to almost ₹260 crore in FY25. Our first quarter profits are in line with these projections,” said Sharma.

The company’s typical loan size ranges from ₹1 lakh to ₹2 lakh, competing with startups like Lendingkart, Axio, and Indifi.

Expanding Offerings

Beyond microlending, Aye Finance has started offering property-based loans, providing customers with larger loans up to ₹10 lakh. This segment has grown from 3% to 10% of their portfolio, with expectations to reach 16-17% this year.

“We found that customers looking for a hypothecation loan for machinery also sometimes need larger loans. A normal hypothecation loan is between ₹1 lakh and ₹2 lakh, while a larger loan could be up to ₹10 lakh. In those cases, customers are willing to offer property as collateral, so we have started actively providing property-based loans,” he explained.

A hypothecation loan is a type of financing where the borrower uses assets like inventory or vehicles as collateral without transferring ownership to the lender.

Aye Finance has secured about ₹10,000 crore in equity funding and over ₹2,200 crore in debt, with investors like Elevation Capital, Capital G, and Alphabet.

Last month, the company raised $30 million in debt from Dutch bank FMO, and $37 million in a Series F round led by British International Investment in December.

“A lot of our funding is debt. We recently secured a large facility from Goldman Sachs, which is $100 million to be disbursed in tranches. All that money will support the growth of the ₹2,000 crore extra AUM we plan to build,” said Sharma.

He noted a strong recovery in demand for MSME loans after the pandemic. Sharma mentioned that in 2022-23, there was hesitancy due to uncertainty, but in 2023-24, demand has been strong and continues to grow.