Bengaluru: Oxyzo Financial Services, the lending arm of SoftBank-backed business-to-business (B2B) commerce startup OfBusiness, has raised its first external funding of $200 million, in what is the largest series-A funding ever for an Indian startup.
With a valuation of $1 billion after the funding, Oxyzo is the latest addition to India’s growing list of unicorns.
The new financing was co-led by Alpha Wave Global and Tiger Global with participation from Norwest Venture Partners, Matrix Partners and Creation Investments, Oxyzo chief executive Ruchi Kalra told ET.
New Delhi-based OfBusiness was valued at nearly $5 billion in December last year following a $325 million funding. Oxyzo has been carved out of the group and has raised external capital. The new investors in Oxyzo are common for OfBusiness too, except for SoftBank which has yet to invest in Oxyzo.
Going forward, Kalra and Vasant Sridhar, another cofounder of OfBusiness, will spend all their time on this business. Besides them, Asish Mohapatra, Bhuvan Gupta and Nitin Jain are the cofounder of OfBusiness. Mohapatra and Kalra are married to each other.
“We have operated Oxyzo as a separate unit as part of the OfBusiness group with its own team and now the business has reached a point where it could raise capital on its own. For example, 70% of lending from Oxyzo is outside the OfBusiness suppliers,” Kalra said.
OfBusiness will still hold an about 70-80% stake in the company. It has a team of about 600 people, Kalra said.
Prior to this, a $90 million funding in CredAvenue was the largest equity-only series-A round for an Indian startup. CredAvenue, an enterprise debt marketplace, was also carved out of its umbrella unit, Vivriti Capital. Companies like Paytm Mall and Xpressbees had also been spun out of their group or parent firm in the past and had raised independent capital as standalone units. Their shareholding may have changed over a period of time based on the funding and business expansion.
The Oxyzo team
Oxyzo lends to SMEs for supply-chain finance and has also started lending to new age businesses in sectors like logistics, warehousing and direct-to-consumer, besides financing suppliers of OfBusiness.
According to Kalra, Oxyzo currently has $350 million of assets under management, which have doubled in one year, with gross non-performing assets of 1.2%.
“Oxyzo has been profitable since its inception and is currently at around 5.5% pre-tax return on assets, or RoA,” she said, adding that new funds would also be used to maintain the capital adequacy ratio as per regulations, as the business would further be scaled.
“We will also use the funding for inorganic expansion through acquisitions. We will scale the supply chain marketplace, launch innovative fixed-income products for the SME space, and scale other fee incomes business lines including debt capital markets and securities,” the CEO said.
Both OfBusiness and Oxyzo have a strong borrowing profile with over 50 financial institutions on board, Kalra said. Oxyzo is also planning to open its supply-chain marketplace to other lenders who can lend to suppliers and businesses on the platform.
Oxyzo’s cumulative disbursements stand at over $2 billion now. This includes the amount being lent and which circulates back after the loan is paid, typically within 90 days.
“We’ve been fortunate to be their partners for a while and have seen an impressive scale-up with best-in-class risk management despite strong headwinds from Covid-19. We look forward to helping build a high-single-digit RoA business that compounds over a long runway,” said Navroz D Udwadia, cofounder and partner at Alpha Wave Global.
“As the B2B landscape in India evolves, OfBusiness and Oxyzo will be twin pillars to open up opportunities and lower costs for millions of SMEs across India,” said Griffin Schroeder, partner at Tiger Global.