India-based business loan provider Kogta Financial has attracted Rs 3bn ($42.2m) in a series C round co-led by investment bank Morgan Stanley’s Private Equity division, the Economic Times reported yesterday.
Private equity firm Creador co-led the round, which followed a $21.8m round featuring Morgan Stanley’s Private Equity Asia fund and IIFL Asset Management’s Seed Ventures unit in November 2018.
Kogta is a non-banking debt provider that offers loans for small and medium-sized retail enterprises in addition to financing options for used commercial vehicles such as cars and tractors.
The company has lent approximately $116m to some 30,000 active customers and operates 105 physical outlets across central and western India.
India’s non-banking financing sector has come under scrutiny after a major provider, Infrastructure Leasing & Financial Services, defaulted on its loan obligations in 2018, prompting the central government to step in.
ET suggested the Indian government could seek to assuage the economic risks by extending its insolvency and bankruptcy code to cover the industry.
Morgan Stanley Private Equity Asia provided $16.1m for the November round while IIFL supplied $5.7m, according to ET. IIFL Seed Ventures is Kogta’s earliest institutional investor, having injected an undisclosed sum in 2016, and has now reportedly invested about $10m altogether.