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.
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 INR 8.8 trillion (~$135 bn), 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 INR 6,500 Crore (~$1 bn). 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.”