In a significant development for India's small business financing landscape, BlackSoil Capital has announced ambitious expansion plans following its strategic merger with Caspian Debt. The new age lender is poised to dramatically scale its operations while maintaining disciplined underwriting standards.
Strategic Merger Creates Lending Powerhouse
The combination with Caspian Debt has created a stronger entity better positioned for the next growth phase. Ankur Bansal, Managing Director of BlackSoil, revealed that the merged organization benefits from enhanced economies of scale, a more diversified portfolio, and improved capital access at lower costs.
"The combined entity is larger, benefiting from economies of scale, a more diversified book, and the ability to access capital at a lower cost," Bansal told TOI during an exclusive interview.
Financial Performance and Growth Targets
The company has demonstrated robust financial health with impressive metrics. Last year, BlackSoil delivered approximately 3% return on assets and over 9% return on equity. With the operational advantages from increased scale, the company expects to double its profits within the next two to three years.
Since its inception, BlackSoil has generated cumulative profits of about Rs 280 crore and maintains a net worth of approximately Rs 650 crore. This solid financial foundation provides ample room for leveraging before the next equity funding round.
The growth trajectory has been remarkable, with Assets Under Management (AUM) surging from Rs 100 crore in FY17 to approximately Rs 1,900 crore, representing a compound annual growth rate of 25-30%. Post-merger, the company is targeting around 50% growth in the coming years.
Focus on Underserved MSME Segment
BlackSoil is concentrating its efforts on mid-market MSMEs with annual revenues between Rs 50-100 crore. According to Bansal, these enterprises often possess strong business fundamentals but typically lack traditional collateral.
"Since they come to us without collateral, our underwriting is based on cash flows and business strength," Bansal explained. For trading-linked businesses, the company provides supply-chain financing through invoice funding solutions.
The merger significantly enhances the company's capacity to serve larger borrower requirements. Caspian's clients who previously received up to Rs 10 crore can now access funding in the Rs 30-40 crore range, enabling the company to maintain customer relationships as businesses scale.
Disciplined Underwriting and Asset Quality
Maintaining asset quality remains a cornerstone of BlackSoil's strategy. The company reports net NPAs of approximately 1.5%, with cumulative write-offs limited to about Rs 40 crore against Rs 13,000 crore deployed to date.
This disciplined approach extends to their evaluation process, where only about 10% of proposals receive approval. This selective methodology helps keep credit costs under control while ensuring portfolio quality.
Term loans constitute roughly 70% of the company's portfolio, reflecting their focus on structured, longer-term financing relationships.
International Expansion and Impact Focus
The merger brings new international shareholders to the table, including global impact investors FMO, Triodos Bank, and Gray Matter, while DFC has joined as a lender. This international backing is expected to enhance access to overseas capital markets.
Bansal highlighted that 65-70% of their portfolio already qualifies under impact investment criteria, spanning agriculture, climate finance, healthcare, and MSME supply chains. The company maintains strict exclusion policies, refusing to fund sectors like coal or fossil fuels.
Emphasizing their long-term vision, Bansal stated, "The goal is not a rushed exit. It is to grow responsibly through cycles, supported by strong governance, digital capabilities and disciplined underwriting."
The merger provides BlackSoil with the scale, technological edge, and capital relationships necessary to support more MSMEs across India in what the company describes as a "disciplined and sustainable manner."
