Chennai-Based Mahaveer Finance Secures $25 Million in Series C Funding
Mahaveer Finance, a prominent non-banking financial company (NBFC) headquartered in Chennai and specializing in used commercial and passenger vehicle financing, has successfully raised Rs 200 crore in its Series C funding round. This investment was led by Elevation Capital, with contributions from existing investors BanyanTree Finance and First Bridge Capital. The capital infusion aims to enhance the company's operational capabilities, strengthen its credit infrastructure, and broaden lending opportunities for underbanked segments. With assets currently exceeding Rs 1,000 crore, Mahaveer aspires to multiply its assets under management (AUM) five times by FY28. Established in 1981, the company ventured into used vehicle financing in 2001, developing a unique valuation-based underwriting model that evaluates various factors including vehicle price, usage history, and configuration.
Expanding Financial Reach and Credit Infrastructure
The infusion of funds will primarily focus on expanding Mahaveer’s branch network across South India, enhancing proprietary credit infrastructure, and increasing lending to underserved customer groups. Since its inception, the company has been instrumental in providing financial solutions to first-time vehicle owners or new-to-credit customers, predominantly aged between 30 and 45. Under the leadership of CEO Deepak Dugar and CFO Praveen Dugar, Mahaveer has extended its operations to 80 branches spanning Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, and Puducherry. Their innovative Surety credit engine combines customer inputs, asset data, and technology-driven KYC authentication to offer swift loan approvals at branch levels, significantly improving operational efficiency.
Since 2016, Mahaveer has undergone substantial growth under second-generation leadership. It has developed a robust grid-based model that supports credit decisions by addressing the significant challenge of price discovery in used vehicle lending. Early integration into the resale business enabled the creation of this sophisticated model, which considers aspects like ownership changes and body type. The company also emphasizes guiding customers on appropriate vehicle pricing while maintaining low default rates. Elevation Capital’s involvement validates Mahaveer’s strategic approach in a market segment where informal lending still holds considerable sway. Approximately 70% of their borrowers are first-time vehicle owners or new-to-credit customers, underscoring their commitment to financial inclusivity.
Technological Advancements and Future Prospects
With the adoption of advanced technology, Mahaveer has improved field executive productivity from three to four loan files per month, attributed to reduced cash collections and tech-led assessments. Pre-Covid, cash collections stood at around 60%, but they have now dropped to approximately 10-15%. This reduction allows executives more time to focus on sourcing new business opportunities. Additionally, Mahaveer is exploring secured MSME loans and considering entry into EV financing, although it anticipates the used EV market will mature only over the next few years. The company maintains relationships with over 40 lenders, including SBI and HDFC, ensuring sufficient capital for future endeavors.
Mahaveer Finance boasts a historically profitable track record and continues to expand its governance framework by adding experienced independent board members, such as a former RBI Chief General Manager. While details regarding valuation and promoter stake remain undisclosed, the company remains optimistic about its growth trajectory. As the used vehicle lending market evolves, Mahaveer aims to solidify its position as a leader in providing reliable and inclusive financial services. Their dedication to innovation, coupled with a strong foundation in credit assessment and customer guidance, positions them well for continued success in an ever-changing industry landscape.