Alphabet-backed Indian lender files for $171M IPO

Aye Finance, a lender targeting small- and medium-sized businesses in India, is seeking to raise $171 million from its initial public offering, it disclosed in a filing Tuesday.

The offering comprises a $104 million fresh share issue and a $67 million secondary sale by existing investors. Proceeds from the IPO will be used to expand the startup’s loan portfolio and strengthen its capital base.

The lender, backed by Alphabet’s venture arm, CapitalG, is currently valued at about $400 million and operates 499 branches across 22 Indian states. It had $588 million in assets under management as of September.

Aye Finance extends business loans — including mortgage, hypothecation, and term credit — to small businesses in the unorganized sector that are typically excluded from traditional banking systems. Its average loan is about $1,800, and the company says it leverages proprietary technology and analytics to assess its customers’ creditworthiness.

The company’s revenue reached $122.5 million in the fiscal year ended 2024, but its nonperforming assets increased from 2.74% to 3.29%.

The startup, which also counts Elevation Capital and British International Investment among its backers, has raised more than $160 million to date.

The filing of Aye Finance’s IPO prospectus caps a record year for Indian IPOs. Financial services startup MobiKwik is going public soon, while Swiggy’s IPO last month was the largest among tech startups globally this year.

The filing also comes at a critical moment for India’s financial services sector. The micro, small, and medium enterprise segment accounts for approximately 30% of India’s GDP but faces substantial credit gaps, estimated at over $650 billion.

Axis Capital, IIFL Capital, JM Financial, and Nuvama Wealth Management are bookrunners for Aye Finance.