Ummeed Housing Finance Raises $5.6M in Series B Funding Led by Lok Capital

Delhi-based affordable housing finance company, Ummeed Housing Finance today announced that it has raised Series B funding of $5.6 million from existing investors Lok Capital Growth Fund (Lok’s third fund) and Duane Park.

This is close on the heels of the first institutional funding of $3.5 million raised from Lok and Duane Park in October, 2016. The fresh round of investment will fuel the company’s expansion plans to new locations in North and Central India, lead to investments in SMAC (Social, Mobile, Analytics and Cloud) technologies and grow assets under management by six times in the next year.

Founded in January 2016 by Ashutosh Sharma, who spent 25 years at Citi, HSBC and Bank of Montreal, Ummeed focuses on providing housing finance access to families with low and informal income. Over the last 8 months, Ummeed has grown exponentially with three branches in Delhi, Chandigarh and Jaipur and has close to Rs. 20 crores assets under management (AUM). The company has also fared above industry standards on critical parameters like credit quality, yields, branch and per employee productivity metrics. In the next one year, Ummeed aims to expand to six new locations across North and Central India, and build AUM of Rs. 120 crore by March 2018.

Ummeed has already invested in building a technology platform for loan origination and loan management. In the next phase of technology deployment, Ummeed aims to harness the power of SMAC - social media, mobility, analytics and cloud commuting. It targets to go paperless, deploying tablets in all of its branches that can study the customers, run algorithms for credit scoring and disburse loans at a faster pace.

Talking about the latest fund raise, Ashutosh Sharma, Founder, Ummeed says, “The fresh round of investment comes at a time when Ummeed is ready for scale. We will strengthen our Fintech and move towards becoming a mobile platform. We aim to build scoring modules that can improve operation efficiencies, reduce turnaround time & build robustness around the credit quality of the portfolio. We would like to thank Lok and Duane Park for their continued support as we gear up for our next stage of growth.”

According to a Monitor-Deloitte study commissioned by World Bank and the National Housing Bank, the potential of the Indian affordable housing finance segment is currently pegged at Rs 8.8 trillion (~$135 bn). Topped with this, the Govt of India’s policies like Pradhan Mantri Awas Yojna, promoting affordable housing, is expected to provide further impetus to the segment. This conducive environment gives immense opportunity for a company like Ummeed to lend to the informal market and gain significant market share.

Affordable housing finance is a crucial component of the financial inclusion thesis at Lok as it creates a stable and long-lasting asset for a family, apart from significantly improving their standard of living. Since its inception in 2004, Lok has built an enviable track record of investments in diverse business models in financial inclusion. This includes small finance banks, affordable housing finance and MSME finance.

Announcing the follow-on investment, Vishal Mehta, Co-Founder, Lok Capital said, “Both the approach to building the business and the proof points on the ground have reinforced our faith in the Ummeed team. We believe Ummeed will become a significant player in the affordable housing space in a short span of time, given the large market size, the founding team’s focused approach, strong underwriting capabilities and the vision to leverage technology. We are excited about the growth prospects of the company and are happy to further our commitment in Ummeed.”

Ummeed is backed by a team of ex Citi Bank professionals, who have solid foothold in commercial banking, credit and mortgage. Sachin Grover, the Chief Operating Officer, has over 20 years of mortgage experience at Citi Financials, IIFL and Magma Housing.The operating team of Ummeed consists of professionals with extensive small-ticket mortgage experience at companies like AU Housing, Magma and Shubham. Mr. Bikash Sharma has come on board as Financial Controller with 9 years of experience in fund raising, financial modelling, Treasury and finance functions. He has previously worked in Manappuram Finance and Encore Capital Group.

Lok Capital Fund Leads $3.5M Series A Funding in Ummeed Housing Finance

Lok Capital advised Growth Catalyst Partners (GCP) – the third fund from the India focused impact investor - today announced that it has led the Series A investment of $3.5 million in Ummeed, a Delhi-based Housing Finance company focused on affordable housing in North and Central India. This is the maiden investment from Lok’s third fund. Duane Park is a co-investor in this investment round. The institutional funding will fuel Ummeed’s expansion plans as well as boost deployment of technology towards achieving greater operating efficiency. Vishal Mehta, Cofounder & Partner, Lok Advisory Services and Anurag Bhargava of Duane Park will join the board of Ummeed. Mr. Alok Prasad, Ex-Mortgage Head at Citi Financials and Ex-CEO of Microfinance Industry Association (MFIN), will also join as a Non-Executive Board Member at Ummeed.

The potential of the Indian affordable housing finance segment is pegged at Rs. 8.8 trillion (~$135 billion), according to a Monitor-Deloitte study commissioned by World Bank and the National Housing Bank. However, the portfolio of existing affordable housing players is only Rs. 6,500 Crore (~$1 billion). As banks and large NBFCs focus towards the formal, higher income segment, an immense opportunity presents itself for startups like Ummeed to develop a sustainable business model in lending to the informal market.

Founded in January 2016 by Ashutosh Sharma, a seasoned banker with over 25 years of experience at Citi, HSBC and Bank of Montreal, Ummeed focuses on providing housing finance access to families with low, informal income. The company is backed by a team of ex Citi Bank professionals, who have solid foothold in commercial banking, credit and mortgage. Sachin Grover, the Chief Operating Officer, has over 20 years of mortgage experience at Citi Financials, IIFL and Magma Housing. The operating team consists of professionals with extensive small-ticket mortgage experience at AU Housing, Magma and Shubham.

While companies in the affordable housing space are largely traditional brick and mortar players, Ummeed aims to differentiate itself by leveraging technology to operate its business on ground. Its in-house technology team is building a robust technology platform for loan origination and loan management. Ummeed aims to go paperless, deploying tablets in all of its branches that can study the customers, run algorithms for credit scoring and disburse loans at a faster pace. The company is currently operational in East-Delhi and plans to have 11 branches operating across North and Central India, targeting 1500 customers in the next 12 months.

Talking about the fund raise, Ashutosh Sharma, Founder, Ummeed says, “Families that have semi-formal or informal incomes and comprise the bottom-of-the-pyramid, remain largely under-served by housing finance companies and banks. This is especially true when the loan requirement falls below INR 10 lakhs, making them highly dependent on local money lenders. We want to change this by offering an easier, more reliable option for loans. We also realise that technology will give us the leverage to address needs of a large share of this low income segment. The funding from Lok and Duane Park will help us bolster our technology platform and accelerate our expansion plans.”

Since its inception in 2004, Lok Capital has consistently built an enviable track record of investments in diverse business models in financial inclusion. This includes small finance banks, affordable housing finance and MSME finance. Lok Capital has identified affordable housing finance as a crucial component of financial inclusion as it creates a stable and long-lasting asset for a family, apart from significantly improving their standard of living. Impetus in the form of new housing inventory and evolution of credit assessment methodologies has improved the viability and scalability of affordable housing finance companies. The final piece is access to capital, which is imperative for the growth of these companies. Lok Capital’s investment in Ummeed is the third investment in this sector, following earlier investments in Aptus and SEWA Grih Rin.

Announcing the investment in Ummeed, Vishal Mehta, Cofounder & Partner, Lok Advisory Services says, “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. Ummeed’s approach to marketing with a hub-spoke strategy and a conscious focus to build a technology savvy company will enable this. Ummeed is backed by an extremely capable and credible founding team which straddles superior operating and capital raising experience. We are excited to partner with them.”

Speaking about the investment in Ummeed, Anurag Bhargava of Duane Park Private Limited, said “Duane Park is excited about partnering with Ashutosh and his superb team, all of whom have extensive experience in affordable housing finance. The market is growing and dynamic, and Ummeed will emerge as a leader through its organic growth strategy and partnerships.”