Foxhog Ventures India, a part of Foxhog Ventures US, has submitted an initial public offering (IPO) draft document to the capital market regulator Securities and Exchange Board of India (SEBI) to raise ₹630 crore by the public listing of shares. The Delhi-based venture capital firm, which aspires to become an alternative financing institution for small farmers and businesses in rural areas, has fixed a price band of ₹170-₹200 for its initial share sale.

The company intends to use IPO proceeds to expand its services in almost 3000 villages out of 6500 villages in India. It focuses on providing funds against equity, the ratio may vary as 45% investments for revenue-based funding in rural India and the rest for equity-based funding in tier 1 and tier 2 cities.

Formed in March 2020, Foxhog Ventures invests in farmers, small businesses, and women entrepreneurs in villages and small towns. The company makes ‘revenue-based’ investments, wherein it receives a percentage of the profit earned by the businesses it invests in. It provides a collateral-free financial model to farmers and small business owners, with the objective to correct the imperfections in the current rural financing system. 

The company currently operates 24 branches, 13 micro branches, and more than 40 customer service points in India and one in Malta, Europe.  Foxhog Ventures India’s team comprises about 700 people, including management heads, decision-makers, credit heads, customer care members, business consultants, agents, due-diligence team members, and third-party vendors for outsourcing, verification and field visits. 

Speaking to Fortune India, Tarun Poddar, India Head and MD of Foxhog Ventures, says that he strives to position Foxhog Ventures as rural India-focused venture capital fund and aims to open 60 customer service points (CSP) in India by the end of the current financial year, and 350 CSP in the next one year.

“Small farmers are expected to benefit the most from Foxhog Ventures’ initiative in rural India,” he says.

Explaining about the business model, Poddar says the company makes ‘revenue-based’ investments and there is no collateral, EMI, or interest rate levied on it. “Neither is the customer required to repay the principal amount because Foxhog is earning on from the percentage of profit as mutually agreed by both the parties,” he adds.

Foxhog Ventures aims to penetrate the Tier II and Tier III towns of India where avenues of obtaining financial assistance for agriculture and ancillary activities remain difficult due to the need for collaterals and bulky documentation process. The company aims to offer investments in the range of ₹25,000 to ₹5 lakh for tenure of 2 to 3 years.

On the financial front, Foxhog Ventures India reported 49.6% growth in its profit after tax (PAT) at ₹69.05 crore for the first quarter ended June 2022 (Q1 FY23), as against ₹46.16 crore in the same period last year. The net interest income, the difference between interest revenues and interest expenses, rose 20.8% to ₹132.1 crore, from ₹109.36 crore in the corresponding period last year. The core operating income surged 21.8% to ₹178.39 crore versus ₹146.42 crore in the year-ago period.

During the quarter under review, the net NPA (net non-performing assets) ratio, the percentage of total net NPA to total number of loans provided, declined to 0.7%, from 0.76% in March quarter of 2022 (Q4 FY22). Total provisions stood at ₹1,144 crore, while provision coverage was 79.6% versus 79.2% as of March 31, 2022. 

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