Electronica Finance raises Rs 400 crore from Aavishkaar, LeapFrog

Electronica Finance has raised Rs 400 crore in Series B funding led by LeapFrog Investments and supported by Aavishkaar Capital.

The funding will allow Electronica Finance to scale up MSME credit, rooftop solar financing and micro loan-against-property (LAP) businesses. Headquartered in Pune, Electronica, operates across 15 states through 215 branches.

Electronica Finance is one of India’s largest providers of loans to MSMEs (Micro, Small and Medium Enterprises). The company has grown its assets under management 3x over the past five years and and is projected to increase with a compound annual growth rate of 35% over the next three years.

Shilpa Pophale, managing director and CEO, Electronica Finance, said, that with a strong track record and deep expertise in this segment, EFL this association with two leading social impact investors would enable them to support small businesses to thrive and deliver resilient, low-carbon growth.

EFL said the funds will strengthen the company’s balance sheet, rapidly expand business and boost MSME financing in the manufacturing segment in India in semi-urban and rural India to provide sustainable financial inclusion.

LeapFrog Investments is a profit-with-purpose firm, and Aavishkaar Capital is among the leading impact investing funds in India. Encourage Capital, a US-based impact asset manage, was the first institutional equity investor in EFL.

Stewart Langdon, Partner, LeapFrog Investments, said, Electronica Finance was transforming India’s MSME sector through its sustainable financing solutions. “Their funding plays a vital role in financial inclusion and climate resilience for small business owners who have long been overlooked by banks,” Langdon said.

The benefits of these loans go beyond the small business owner, catalyzing job creation and supporting households and communities, he added.

Anurag Agrawal, partner, Aavishkaar Capital, said, they were partnering with Electronic for their next growth phase. Aavishkaar Capital’s India Fund VI is channelizing capital to resilient businesses solving large problems and EFL’s diverse portfolio across MSME, climate and rural financing brought significant opportunity to bolster inclusive development, Agrawal said.

EFL has financed 75,000 machines, helping customers transition to less energy-intensive production. Their rooftop solar credit market has financed MSMEs to switch to rooftop solar power systems and save energy costs and more than 50,000 metric tonnes of Co2 emissions over the last three years.