Veritas Finance Pvt Ltd, a Chennai-based financial services firm focused on lending to micro and small enterprises, has achieved unicorn status following an internal funding round of ₹240 crore. This round saw participation from key investors such as Avendus FLF, Lok Capital, and Evolvence.

As a result of the fresh capital infusion, Veritas’ valuation has risen to about ₹8,500 crore, marking it as one of the latest startups to enter the unicorn club.

“This milestone reflects our investors’ trust in our ability to build a successful business that supports micro-enterprises in rural India. While our valuation surpassing ₹8,500 crore is significant, what truly gives us pride is the impact we’ve been able to make,” said D Arulmany, Managing Director & CEO, in an interview with businessline. He added that the new funds would strengthen the company’s capital base and fuel further growth.

Demonetisation, pandemic could not dampen growth

The company has cumulatively raised over ₹8,500 crore from about 75 lenders across various categories. In just 8 years, Veritas has grown into an organisation with over 7,500 employees, a gross income of ₹1,000 crore, 400 branches, 2 lakh customers, and ₹6,400 crore in assets under management (AUM). These milestones were achieved despite challenges like demonetisation, the liquidity crisis, and the COVID-19 pandemic,Arulmany said.

In FY24, Veritas recorded a gross income of ₹1,124 crore, with a profit after tax (before other comprehensive income) of ₹245 crore. It disbursed ₹3,695 crore in loans during the last fiscal.

As of June 30, 2024, the company’s shareholding structure included Arulmany and his relatives with 11.7% on a fully diluted basis. Other major shareholders include Norwest Venture Partners X Mauritius (21.8%), Multiples PE and affiliates (16.4%), Kedaara Capital Fund II LLP (15.2%), Lok Capital and affiliates (11.3%), British International Investments Plc (10.4%), Avendus Future Leaders Fund (2.3%), and Caspian Impact Investment Advisers Pvt Ltd (0.2%). The remaining shares are held by individual shareholders, employees, and their relatives.

‘IPO in one year’

Regarding plans to go public, Arulmany hinted that Veritas may approach the capital markets with an IPO in the next twelve months to support its growth plans. The IPO is expected to raise between ₹1,500 crore and ₹2,000 crore, including a secondary sale.

Veritas currently offers four core products: unsecured loans, MSME business loans, affordable housing, and used vehicle finance.

Services offered

Under unsecured loans, Veritas provides working capital loans, replacing local moneylenders who charge exorbitant interest rates. The average ticket size is ₹1.7 lakh and it offers a repayment period of one to two years, with weekly instalments starting at ₹1,000. “We limit unsecured loans to 10% of our portfolio due to the associated risks, but the potential is immense,” Arulmany said.

The MSME business loans are targeted at semi-urban and rural customers (earning in the range of ₹30,000 to ₹40,000 per month) who often lack formal documentation or income proof. Backed by property collateral, this segment presents significant growth opportunities, despite its challenges. Due to inflation, the average ticket size has increased from ₹3-4 lakh to ₹4.5 lakh.

Veritas’ affordable housing loans focus on self-construction projects in semi-urban and rural areas. “There is substantial room for growth as formal housing covers just 1% of India’s land,” said Arulmany. The average ticket size for these loans is ₹11 lakh, and the company has grown this business to a ₹1,100 crore loan book.

The fourth product, used commercial vehicle finance, was launched in April this year. This product targets small and light commercial vehicles, with average loan amounts of ₹4-5 lakh. The company sees this segment as another promising growth area.

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