South India-based NBFC IKF Finance has raised Rs 250 crore in a funding round led by Accion’s Digital Transformation Fund.

Founded in the early 1990s by V G K Prasad, the used car, housing and MSME financier is backed by MO Alternate Investment Advisors (MO Alts), which invested in the company in 2015. Accion, a global impact fund, anchored the round at Rs 120 crore, with the rest raised from other investors, including large HNI/family offices. The investment comes from Accion’s Digital Transformation Fund, which invests in large, scaled financial services providers for growth equity and digital transformation investments.

Since MO Alts’ investment, IKF has grown into a multi-product financial institution with multiple capabilities in commercial vehicle loans, MSME finance and affordable housing loans. IKF is one of the few lenders maintaining steady growth and profitability throughout the economic cycle. Despite Covid and other macro headwinds, IKF has delivered strong growth of more than 40% over the past few years.

Vasumathi Koganti, Founder and Managing Director of IKF Finance, said, ” IKF is an investment by Accion through its Digital Transformation Fund. With more than three decades of asset financing experience, we have established a solid foundation in geographical distribution, diversified product portfolio and customer base, strong credit and risk assessment framework, well-established systems and processes, and integrated technology platforms.”

“Over the past few years, with our key stakeholder, Motilal Oswal Alternates, we have been laying the foundations for a massive transformation aimed at achieving best-in-class growth and profitability on a sustainable basis. Accion’s digital strategy will play a key role in enabling this transformation. Together with Accion’s Digital Transformation Fund, we will now leverage Accion’s experience in creating value for financial institutions in emerging markets through various interventions,” he said.

In 2017, the company incubated a housing finance subsidiary growing at a CAGR of over 60% and quickly scaled to Rs 700 crore. The company has a consolidated AUM of Rs 3,200 crore as of March 2023 and a network of 200 branches in Andhra Pradesh, Telangana, Gujarat, Tamil Nadu, Maharashtra and Rajasthan.