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Ummeed Housing Finance Raises Series B Funding of $5.6M Led by Lok Capital
The fresh round of investment will fuel the company’s expansion plans to new locations in North and Central India, lead to investments in SMAC (Social, Mobile, Analytics and Cloud) technologies and grow assets under management by six times in the next year.
Delhi-based affordable housing finance company, Ummeed Housing Finance today announced that it has raised Series B funding of $5.6 million from existing investors Lok Capital Growth Fund (Lok’s third fund) and Duane Park.
This is close on the heels of the first institutional funding of $3.5 million raised from Lok and Duane Park in October, 2016. The fresh round of investment will fuel the company’s expansion plans to new locations in North and Central India, lead to investments in SMAC (Social, Mobile, Analytics and Cloud) technologies and grow assets under management by six times in the next year.
Founded in January 2016 by Ashutosh Sharma, who spent 25 years at Citi, HSBC and Bank of Montreal, Ummeed focuses on providing housing finance access to families with low and informal income. Over the last 8 months, Ummeed has grown exponentially with three branches in Delhi, Chandigarh and Jaipur and has close to Rs. 20 crores assets under management (AUM). The company has also fared above industry standards on critical parameters like credit quality, yields, branch and per employee productivity metrics. In the next one year, Ummeed aims to expand to six new locations across North and Central India, and build AUM of Rs. 120 crore by March 2018.
Ummeed has already invested in building a technology platform for loan origination and loan management. In the next phase of technology deployment, Ummeed aims to harness the power of SMAC - social media, mobility, analytics and cloud commuting. It targets to go paperless, deploying tablets in all of its branches that can study the customers, run algorithms for credit scoring and disburse loans at a faster pace.
Talking about the latest fund raise, Ashutosh Sharma, Founder, Ummeed says, “The fresh round of investment comes at a time when Ummeed is ready for scale. We will strengthen our Fintech and move towards becoming a mobile platform. We aim to build scoring modules that can improve operation efficiencies, reduce turnaround time & build robustness around the credit quality of the portfolio. We would like to thank Lok and Duane Park for their continued support as we gear up for our next stage of growth.”
According to a Monitor-Deloitte study commissioned by World Bank and the National Housing Bank, the potential of the Indian affordable housing finance segment is currently pegged at Rs 8.8 trillion (~$135 bn). Topped with this, the Govt of India’s policies like Pradhan Mantri Awas Yojna, promoting affordable housing, is expected to provide further impetus to the segment. This conducive environment gives immense opportunity for a company like Ummeed to lend to the informal market and gain significant market share.
Affordable housing finance is a crucial component of the financial inclusion thesis at Lok as it creates a stable and long-lasting asset for a family, apart from significantly improving their standard of living. Since its inception in 2004, Lok has built an enviable track record of investments in diverse business models in financial inclusion. This includes small finance banks, affordable housing finance and MSME finance.
Announcing the follow-on investment, Vishal Mehta, Co-Founder, Lok Capital said, “Both the approach to building the business and the proof points on the ground have reinforced our faith in the Ummeed team. We believe Ummeed will become a significant player in the affordable housing space in a short span of time, given the large market size, the founding team’s focused approach, strong underwriting capabilities and the vision to leverage technology. We are excited about the growth prospects of the company and are happy to further our commitment in Ummeed.”
Ummeed is backed by a team of ex Citi Bank professionals, who have solid foothold in commercial banking, credit and mortgage. Sachin Grover, the Chief Operating Officer, has over 20 years of mortgage experience at Citi Financials, IIFL and Magma Housing.The operating team of Ummeed consists of professionals with extensive small-ticket mortgage experience at companies like AU Housing, Magma and Shubham. Mr. Bikash Mishra has come on board as Financial Controller with 9 years of experience in fund raising, financial modelling, Treasury and finance functions. He has previously worked in Manappuram Finance and Encore Capital Group.