Lok Capital backs India's Ummeed Housing Finance

Duane Park, an Indian trading firm, also participated in the round; Lok's Vishal Mehta and Duane Park's Anurag Bhargava will join Ummeed's board. The company will use the new capital to support its expansion plans and to improve operational efficiency through investing in new technology.

Ummeed was founded earlier this year, and focuses on providing financing to low income families working in the informal economy who have difficulty obtaining loans from traditional banks and larger non-banking financial companies (NBFCs). The company believes these underserved borrowers could constitute up to 90% of India's population, giving it substantial growth opportunities.

Ummeed provides small loans in the range of INR300,000-2.5 million ($4,500-$37,000) and aims to use technology to create savings through efficiency. It is currently designing a proprietary platform to allow origination and management of loans from a central location, with funds disbursed through local branches. The company is already operational in Delhi and intends to open 11 branches across north and central India in the next 12 months.

"While there is a large unaddressed market in affordable housing finance, to make a significant impact and build an efficient, scalable model, depth of reach is key," said Mehta. "Ummeed's approach to marketing with a hub-spoke strategy and a conscious focus to build a technology savvy company will enable this."

This is the first investment from Lok's third fund, which reached a first close of $40.5 million earlier this year. The firm is targeting a $100 million final close by next year. Lok focuses on growth-stage investments in the financial services, agriculture and healthcare sectors in India, committing $2-10 million per deal.

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• Topics
• South Asia
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• India
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