Oxyzo Financial Services Limited, the lending arm of OfBusiness, has successfully raised ₹100 crore through non-convertible debentures (NCDs). This funding round, subscribed by AK Capital Finance Limited, marks a significant milestone for the fintech unicorn. The allotment, made on February 18, 2025, included 1,00,000 debentures at a face value of ₹10,000 each.
The debt instruments come with a tenure of 24 months, maturing on February 18, 2027, and carry an annual interest rate of 9.75%. The issuance is secured with collateral worth 110% of the outstanding principal, ensuring investor confidence.
Oxyzo specializes in supply chain financing, offering working capital solutions to SMEs. The fresh capital infusion will strengthen its long-term resources and support its expansion plans. The funding aligns with Oxyzo’s aggressive growth strategy as it continues to scale its financial services portfolio.
Oxyzo, which became a unicorn in 2022, has witnessed remarkable growth, reporting a profit of ₹290 crore on revenues exceeding ₹900 crore in FY24. As the lending subsidiary of OfBusiness, Oxyzo plays a crucial role in India’s fintech ecosystem by enabling credit access for small and medium enterprises (SMEs).
The development also comes at a time when OfBusiness, backed by SoftBank, is preparing for a $500 million IPO by August 2026. With OfBusiness holding over 70% ownership in Oxyzo, the latter may also consider a separate public listing in the future.
1. Oxyzo’s Business Model and Revenue Streams
1.1 The Working Model of Oxyzo
Oxyzo operates as a digital lending platform catering primarily to SMEs and mid-sized businesses. The company focuses on structured credit, providing businesses with financing solutions tailored to their working capital needs. It integrates technology with financial services to streamline the lending process and enhance credit accessibility for underserved businesses.
1.2 Revenue Model
Oxyzo generates revenue through multiple streams:
- Interest Income: Earnings from interest charged on loans provided to SMEs.
- Processing Fees: Fees collected from borrowers for loan origination and disbursal.
- Supply Chain Financing Fees: Revenue from short-term financing solutions offered to businesses.
- Partnerships with Financial Institutions: Collaborations with banks and NBFCs to co-lend or securitize loan portfolios.
- Risk Management Services: Offering credit assessment tools and risk mitigation strategies to businesses.
2. Funding and Growth History
2.1 Funding Journey
Oxyzo was founded as the lending arm of OfBusiness and raised $200 million in its maiden funding round in 2022. The round, led by Tiger Global, Norwest Venture Partners, Alpha Wave, and others, helped the company achieve unicorn status. Since then, Oxyzo has continued to attract investor interest due to its strong financial performance and innovative credit solutions.
2.2 Financial Performance
In FY23, Oxyzo reported revenues of ₹570 crore with a net profit of ₹200 crore. In FY24, revenue surged beyond ₹900 crore, and net profits climbed to ₹290 crore. The company’s assets under management (AUM) currently stand at $360 million.
3. Recent Debt Funding Details
3.1 Structure of the Debt Issuance
Oxyzo’s latest funding round involved the issuance of ₹100 crore worth of NCDs to AK Capital Finance Limited. The debentures were priced at ₹10,000 each, with a total of 1,00,000 units allocated.
3.2 Tenure and Interest Rate
The debt securities have a tenure of 24 months, maturing in February 2027. They carry an interest rate of 9.75% per annum, making them an attractive investment for institutional investors.
3.3 Utilization of Funds
The capital raised will be used to enhance Oxyzo’s long-term financial resources and meet its growing working capital demands. The funds will also support the company’s expansion initiatives as it continues to scale its lending operations.
4. Industry Trends and Competitive Landscape
4.1 Growth of Fintech Lending in India
The Indian fintech lending sector has been experiencing rapid expansion, driven by increased digital adoption and regulatory support. Key trends include:
- Rising Demand for SME Financing: Small businesses are increasingly seeking alternative financing solutions beyond traditional banks.
- Digital Lending Boom: Fintech firms are leveraging AI, data analytics, and automation to streamline loan disbursement.
- Increased Investor Interest: Global investors are actively funding fintech startups, given their high growth potential.
4.2 Competition in the Market
Oxyzo competes with other fintech lenders such as Lendingkart, Aye Finance, and Indifi. However, its strong parent backing, robust risk management strategies, and tailored financial products set it apart from competitors.
5. Future Outlook
Oxyzo is positioned for continued growth as it expands its loan portfolio and enhances its technological capabilities. With OfBusiness planning a $500 million IPO, Oxyzo may also explore a public listing in the coming years.
6. Learnings for Startups and Entrepreneurs
- Leveraging Technology in Finance: Fintech firms like Oxyzo use data analytics and AI to enhance credit assessments and lending efficiency.
- Sustainable Growth Strategy: The structured credit approach helps in risk mitigation while maintaining profitability.
- Diversified Revenue Streams: Multiple income sources, including interest earnings and supply chain financing fees, create a robust business model.
- Strong Backing Matters: Support from investors like SoftBank and Tiger Global enhances credibility and accelerates growth.
- Debt Financing as a Growth Lever: Instead of relying solely on equity, strategic debt raises can help fintechs scale operations efficiently.
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