Italy's AideXa boosts capital as lending grows strongly

MILAN (Reuters) - Italian digital lender AideXa has completed a 20 million euro ($21 million) capital raise from shareholders as lending to the small businesses it targets grows strongly amid a wider credit squeeze, it said on Tuesday.

AideXa, founded by veteran former UniCredit executives Roberto Nicastro and Federico Sforza, said it had granted 400 million euros ($428 million) to small Italian businesses so far, with an average loan size of less than 200,000 euros.

Such small loans do not make economic sense for traditional lenders so AideXa uses a proprietary credit-scoring algorithm to select the soundest among companies that are too small to be served by high street banks.

Like other digital banks AideXa is more exposed than traditional commercial lenders to higher funding costs as official rates rise.

"New lending is growing at an annual 70% rate for us. This rapid pace of growth, which other fintech lenders are also recording, is good news because it allows us to offset higher funding costs than traditional banks," Nicastro told Reuters.

"We do pay more than high street banks for liquidity but as digital branchless bank we have a more efficient business model and we're pricing our loans accordingly," he added.

AideXa said its core capital would rise above 35% following the capital raise.

Three quarters of its loans are covered by state guarantees it said, adding that performing loans considered at risk, so called 'Stage 2' loans, together with gross impaired loans accounted for 6.9% of total lending. ($1 = 0.9338 euros)

($1 = 0.9348 euros)

(Reporting by Valentina Za; Editing by Keith Weir)