Financial inclusion services provider Dvara Kshetriya Gramin Financial Services Pvt. Ltd (Dvara KGFS) has raised Rs 97 crore ($14 million) in a Series E funding round.
Stakeboat Capital led the new round with LeapFrog Investments and parent Dvara Trust also participating, Dvara KGFS said in a statement.
Stakeboat is a private equity firm co-founded by serial entrepreneur GSK Velu while LeapFrog is an investment firm that focuses on emerging markets.
Dvara KGFS said it will use the money to enter new markets and improve its digital infrastructure to provide better services to its clients.
Dvara Trust executive vice chair and group president Samir Shah said the new capital would also help strengthen Dvara KGFS’ position in regions where it already operates. “The funds will help us deliver highly personalised wealth management solutions to our rural customers across a range of touch points,” he said.
The company currently has a presence in Tamil Nadu, Karnataka, Odisha and Uttarakhand, and is looking to expand to Jharkhand and Chhattisgarh.
Dvara KGFS, which was incorporated in 2008, is a non-banking financial company. It was earlier a wholly owned unit of IFMR Rural Channel Services Pvt. Ltd but was spun off into a separate company in March.
According to an April report by ratings firm ICRA, Dvara Trust held a stake of about 45% in Dvara KGFS as of March while US non-profit firm Accion International and LeapFrog owned about 33% and 22%, respectively. The company's shareholding structure after the Series E couldn't be ascertained.
Stakeboat Capital investment director Vinay Subramanian said Dvara, formerly known as Pudhuaaru Financial Services Pvt. Ltd, has a “uniquely deep rural footprint and customer-centric wealth management approach”.
“With the exponential growth of mobile penetration in India, Dvara KGFS is well poised to serve the rural underbanked, offering seamless customer service on par with their urban counterparts,” he said.
This is only the third investment for Stakeboat. It has previously invested in Gurugram-based Leixir Resources, which manages a small dental labs chain in North America; and Sankalp Semiconductor, an analogue and mixed-signal semiconductor design services company.
ICICI Securities acted as the financial adviser for the latest transaction.
Dvara KGFS is also looking to raise over Rs 600 crore in debt from various financial institutions such as banks and via instruments like external commercial borrowings. It manages about Rs 760 crore in assets and reported revenue of Rs 163 crore for 2018-19.
The latest round of funding comes after Dvara KGFS’ acquisition of Varam Capital Pvt. Ltd from Inditrade Capital Ltd in April. Inditrade had picked up a majority stake in Varam, which is based out of Raipur, in 2017.
In March this year, Dvara Trust, LeapFrog and Accion International agreed to sell a partial stake in non-bank lender Northern Arc Capital Ltd after it secured Rs 910 crore in funding from several institutional investors.
