Avail Finance acquires a neobank and requests authorization to buy NBFC

Avail Finance, which offers blue collar loans, has acquired YeLo, a neobank operating in the same segment, and is seeking a regulatory deal to buy non-bank lender Art Climate Finance (India) Pvt. Ltd., said a person familiar with the development.

The acquisitions are expected to help the fintech platform become a one-stop solution for the blue-collar segment, with lending, savings, insurance and investing solutions under one roof. “Avail Finance also plans to raise funds by the end of the year,” the person familiar with the developments said, on condition of anonymity.

YeLo, a Bengaluru-based start-up co-founded by former Omidyar Network executive Nilesh Agarwal and Abhishek Challa, focuses on workers who earn ??8,000- ??30,000 per month and worked in partnership with ICICI Bank. It had raised an undisclosed amount in its first round led by Matrix Partners, Omidyar Network India, Flourish VC and Better Capital in September 2019.

Avail Finance, founded by Ankush, the brother of Ola Cabs founder Bhavish Aggarwal, was incorporated in 2016, with the two brothers as directors.

“The agreement has not yet been formalized. However, Avail Finance paid salaries to YeLo employees and other costs in the form of consulting fees, which is close to ??40-50 lakh per month, ”said the person quoted earlier in the story.

It could be an investor-driven merger, as Avail is also backed by Matrix Partners.

A message sent to Nilesh Agarwal and a letter sent to Ankush Aggarwal went unanswered until going to press.

However, a filing made by YeLo with the Registrar of Companies alludes to its sale. According to the file, Abraham Chacko, independent director of YeLo, recently resigned from the board of directors. “With reference to the captioned topic, in light of the potential sale of the company, I want to step down as the 0.5 billion director of Finhealth Pvt. Ltd, with effect from September 8, 2021, ”he wrote in his resignation letter. YeLo is a brand operated by 0.5 billion Finhealth Pvt Ltd.

Additionally, YeLo’s Nilesh Agarwal has joined PhonePe as Business Development Manager.

While the acquisition of YeLo is at an advanced stage, the purchase of Delhi-based Art Climate Finance is pending regulatory approval. Currently, Avail operates a fintech platform and lends to its clients through partnerships with several non-bank financial companies (NBFCs). An NBFC license will help Avail lend directly to customers.

“It is possible that this acquisition will be done through a separate entity and not be reflected at all on Avail’s books,” the person quoted earlier said.

Art Climate Finance (India) is led by Rakhee Kapoor Tandon and Payal Sanghavi Bharat. Kapoor Tandon is the daughter of the former Managing Director and CEO of Yes Bank, Rana Kapoor. For the fiscal year ended March 2020, the NBFC declared ??23 lakh of operating income and ??14 lakh of net profit.

Queries sent to Art Climate were not answered before press time.

The Directorate of Enforcement, which is investigating a money laundering case at Yes Bank, had asked Kapoor Tandon to appear in person as part of the investigation. However, she requested an exemption from the in-person requirement due to the pandemic.

She is a London-based non-resident Indian and a director of several companies including Art Climate Finance, Art Financial Services (India) Pvt. Ltd, ART Real Assets Finance (India) Pvt. Ltd holds NBFC licenses.

Avail Finance had applied for an NBFC license through its subsidiary AF Capital Pvt. Ltd, in 2019.

However, the request was rejected by the Reserve Bank of India.

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