International Finance Corporation, the private-sector investment arm of the World Bank, will invest up to $10 million (Rs 64 crore) in Gurgaon-based BEBB India Pvt Ltd, which runs Power2SME, an online buying hub for small and medium enterprises (SMEs), the investment firm said in a disclosure note.
The company was founded by R Narayan in January 2012 with a seed capital of Rs 2 crore, and it started operations in July that year. In October 2012, the company raised a Series A round worth Rs 10 crore from Inventus Capital Partners and Kalaari Capital. After that, it raised $6 million (Rs 35.7 crore) in its Series B round of funding from existing investors Inventus and Kalaari, and from Accel Partners in April 2013.
The company had raised an undisclosed amount of funding from Infosys co-founder and former UIDAI chairman Nandan Nilekani with participation from existing investors in January 2016.
Power2SME operates like a buying club, offering information and tools that enable SMEs to reduce their procurement costs. It helps SMEs eliminate the need to engage with multiple vendors, provides doorstep delivery of goods through logistics providers, offers flexible payment options, and accepts orders online 24×7. The company is currently catering to industries such as construction, manufacturing, precision engineering, and automotive original equipment manufacturers.
For revenue generation, the company buys products at a certain price from the suppliers and sells those to the SMEs by charging a bit more. For instance, if a product is priced at Rs 100, the company buys it at Rs 80 and sells it for Rs 83. Power2SME has SME clients with turnover ranging from Rs 5 crore to Rs 250 crore and works with established suppliers including Indian Oil, ArcelorMittal, SAIL, GAIL and Haldia Petrochemicals, among others.
IFC’s other recent investments in India include two non-banking finance companies, where it made debt funding totaling $150 million (Rs 1,020 crore). Last month, the World Bank’s private-sector investment arm said in a disclosure that it will invest $100 million in Temasek-owned Fullerton India Credit Company Ltd and $50 million in Warburg-backed Capital First. The investments are part of IFC’s strategic target to reach 10 million MSMEs during 2016-17 through 2020-21.
In the same month, IFC said it will provide a senior loan of $100 million to Federal Bank Ltd to fund its branch at the International Financial Services Centre in Gift City, Gujarat.
Emerging markets impact investment firm LeapFrog Investments Ltd had also received a commitment of $25 million (Rs 161 crore) from IFC last month.
In February, IFC planned to invest up to $15 million (Rs 100 crore) in Clean Max Enviro Energy Solutions Pvt Ltd, a renewable energy service company.
Apart from lending to companies in India, IFC has an active direct private equity-style investment practice. It also has an active LP, or limited partner, portfolio in India where it backs PE and venture capital funds focused on India.