Veritas Finance Joins the Unicorn Club!

Veritas Finance Pvt Ltd, a dynamic financial services firm from Chennai, has hit a remarkable milestone by achieving unicorn status, following a significant internal funding round of ₹240 crore. This funding saw engagement from prominent investors, including Avendus FLF, Lok Capital, and Evolvence.

Rising Valuation

This fresh influx of capital has catapulted Veritas’ valuation to around ₹8,500 crore, marking its entry into the exclusive unicorn club of startups.

A Vision for Growth

“This achievement reflects our investors’ confidence in our capability to build a thriving enterprise that uplifts micro-enterprises in rural India. While crossing ₹8,500 crore in valuation is a significant milestone, what truly fills us with pride is the positive impact we’ve created,” shared D Arulmany, Managing Director & CEO, in an interview with businessline. He added that the newly secured funds would bolster the company’s capital base and accelerate future growth.

Thriving Against the Odds

Veritas has impressively raised over ₹8,500 crore from approximately 75 lenders across a wide spectrum. In merely 8 years, the firm has blossomed into a powerhouse with more than 7,500 employees, a gross income of ₹1,000 crore, 400 branches, 2 lakh customers, and ₹6,400 crore in assets under management (AUM). Remarkably, these achievements were realized in the face of challenges like demonetization, the liquidity crisis, and the COVID-19 pandemic, as noted by Arulmany.

Strong Financial Performance

In FY24, Veritas showcased a robust performance with a gross income of ₹1,124 crore and a profit after tax (before other comprehensive income) amounting to ₹245 crore. During the last fiscal year, it disbursed loans totaling ₹3,695 crore.

Shareholding Insights

As of June 30, 2024, the ownership structure included Arulmany and his relatives, holding 11.7% on a fully diluted basis. Other significant shareholders encompass Norwest Venture Partners X Mauritius (21.8%), Multiples PE and affiliates (16.4%), Kedaara Capital Fund II LLP (15.2%), and several others, contributing to an exciting array of stakeholders in the company.

Looking Ahead: IPO on the Horizon

When discussing future plans to go public, Arulmany suggested that Veritas might aim for an IPO within the next twelve months to enhance its growth trajectory. They anticipate raising between ₹1,500 crore and ₹2,000 crore, including a secondary sale.

Diverse Product Offerings

Veritas currently provides four main products: unsecured loans, MSME business loans, affordable housing finance, and used vehicle financing.

Unsecured Loans: A Game Changer

In the unsecured loans segment, Veritas delivers working capital loans, offering a lifeline to those who previously relied on local moneylenders with their steep interest rates. The average loan amount stands at ₹1.7 lakh, with a flexible repayment period of one to two years, yielding weekly installments starting from ₹1,000. “We cap unsecured loans at 10% of our portfolio due to risk factors, but the growth potential is substantial,” Arulmany explained.

Targeting MSMEs

For MSME business loans, Veritas caters to semi-urban and rural clients who earn between ₹30,000 and ₹40,000 monthly but often lack formal documentation. Enhanced by property collateral, this segment reveals significant growth opportunities even amidst challenges. Despite inflation, the average loan size has risen from ₹3-4 lakh to ₹4.5 lakh.

Affordable Housing Focus

Veritas’ commitment extends to affordable housing loans, aimed at self-construction projects in semi-urban and rural locales. “Formal housing currently occupies just 1% of India’s land, indicating a vast opportunity for growth,” noted Arulmany. The average ticket size for these loans is ₹11 lakh, culminating in a ₹1,100 crore loan book.

Financing Used Vehicles

Newly launched in April this year, the used commercial vehicle finance product is designed for small and light commercial vehicles, with average loan amounts ranging between ₹4-5 lakh. Veritas sees this segment as a promising avenue for further expansion.