Tag: funds

Serum Institute of India picks up stake in PolicyBazaar

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Adar Poonwala-led Serum Institute of India Private Limited has acquired a stake in PolicyBazaar from True North.

True North has sold a part of its holding in PolicyBazaar to five independent buyers – Ashoka India Equity Investment Trust Plc, Triumph Global Holdings Pte Limited, Serum Institute of India Private Limited, IIFL Special Opportunities Fund Series 8 and India Acorn Fund Limited.

In October 2020, True North had conducted the first tranche of its stake sale in the company. It continues to be invested in the company for its next phase of growth.

Divya Sehgal, Partner, True North, stated, “We’ve had a great partnership with PolicyBazaar over the last three years. We are extremely pleased with the company’s sustained growth momentum and efficiency in delivering great results in spite of the challenging market conditions. We will continue to support PolicyBazaar as it heads towards public markets in the next 12-15 months and scripts many more success stories.”

Yashish Dahiya, CEO, Policybazaar said, “True North has been and continues to be a good friend, advisor and has supported us as an investor through the last few years. We are grateful for that, and glad to see them having a good partial exit, we welcome on board the new shareholders. True North continues to be an investor and we thank them for the confidence.”

Having commenced operations in 2008, Policybazaar serves over 8 million insurance buyers annually and hosts 40+ insurers on its platform.

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Northern Arc Capital raises $25 million debt from FMO

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Northern Arc Capital, a Chennai-based non-banking finance company (NBFC), has raised $25 million in debt from Dutch impact investor FMO. The fundraising comes close on heels of $10 million debt raised by the company last month from US-based Calvert Impact Capital.

Besides Calvert Impact, Northern Arc has attracted debt financing from an array of global Development Finance Institutions (DFIs) and impact investors over the last 12 months including from US International Development Finance Corporation (DFC) and Asian Development Bank (ADB).

Microfinance borrowers in both urban and rural areas will be key beneficiaries of FMO’s investment, the debt financing platform said in a press release.

“A sizable part of the fund deployment will be towards MFIs whose loans are primarily targeted at women. The loans will play an important role in providing credit to the under-banked households and small businesses, who have been worst hit due to the crisis,” it added.

Commenting on the deal, Bama Balakrishnan, COO of Northern Arc said, “Northern Arc and FMO are natural partners in furthering the cause of financial inclusion in India. With a shared philosophy of catering to borrowers hard hit by Covid-19 pandemic, the facility from FMO is timely and would specifically be used for lending to women, micro-entrepreneurs and SMEs.”

As of March 31, 2021, Northern Arc has enabled significant debt financing of around Rs. 95,000 crore for its clients across microfinance, small business finance, affordable housing finance, vehicle finance, agriculture finance, consumer finance, fintech and mid-market corporates.

Over 140 investors including banks, asset managers, insurance companies, DFIs, private wealth have invested in transactions structured and arranged by Northern Arc Capital.

“The new transaction fits with FMO’s ambition to accelerate financial inclusion with a focus towards women-run businesses and (M)SMEs. With this transaction, FMO supports an excellent partner who continues to service its clients during these challenging COVID-19 times,” Huib-Jan de Ruijter, Chief Investment Officer (a.i), FMO was quoted in the release.

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Trifecta Capital files for ₹1,500 crore late stage VC Fund

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Venture debt provider, Trifecta Capital, is planning to launch a late-stage venture capital fund – Trifecta Leaders Fund – I with a targeted corpus of ₹1,500 crore. Through this Equity Fund, the Firm aims to invest in new economy companies that are category leaders and likely to pursue an IPO in the next 1 to 3 years.

Trifecta Capital has invested in over 70 companies across its two Venture Debt funds and its portfolio now comprises 9 unicorns and 11 unicorns including BigBasket, Pharmeasy, Cars24, Vedantu, Infra.Market, ShareChat, Dailyhunt, UrbanCompany, CarDekho, Blackbuck, Ninjacart, NoBroker, Kreditbee, Dehaat, Turtlemint, Livspace and BharatPe amongst several others.

All these companies are backed by the marquee, global VC funds and have created substantial value in the digital economy. They have cumulatively raised $8.1 billion of equity and are cumulatively valued at $20 billion. With the launch of Trifecta Leaders Fund – I, the firm is extending its platform capabilities as a life cycle capital provider to the start-up ecosystem.

Also read: Trifecta Capital sees top-level exits

The Fund is filling a structural gap in the late-stage VC ecosystem in India, and in addition to primary infusions, will cater to the unmet needs of late-stage companies by providing off-cycle liquidity to early investors, angels, current and former employees including consolidation of equity cap tables.

Trifecta Leaders Fund – I will invest in a targeted set of category-leading start-ups, selected predominantly from Trifecta Capital’s portfolio across its Venture Debt funds where the Firm has proprietary knowledge of the businesses as well as a deep relationship with the Founders and Investors. The Fund will invest $15-30 million each in around 10 companies for minority stakes, through a combination of primary and secondary positions. The firm has already built a strong pipeline of 20 companies as potential portfolio candidates.

“Through the launch of this new fund, we hope to capture the value that is expected to accrue from investing in these category-leading companies, one to three years ahead of an IPO. As the start-up and investing ecosystem matures, it is natural to see large, well-known start-ups plan their IPOs to create liquidity for existing investors and tap the public markets for their longer-term financing needs. We believe that Trifecta Leaders Fund-I is a timely and attractive opportunity for investors who have so far been unable to access these great companies as they are predominantly funded by offshore VC and PE funds,” said Rahul Khanna, Managing Partner, Trifecta Capital, in a statement.

The Fund leadership team has a cumulative 75+ years of lifecycle investing, operating and entrepreneurial experience across global institutions like Canaan Partners, Accenture and Goldman Sachs. With a Fund duration of only 5 years, Trifecta Capital believes this Fund provides a unique investment opportunity for investors, both domestic and offshore, to partner with India’s new economy category leaders. Trifecta Leaders Fund – I have also established a best-in-class governance framework with a global advisory board comprising domain-knowledge experts who can support portfolio companies as they navigate their path to liquidity.

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Global banks face Bear Stears, Lehman like impact in Archegos default, BFSI News, ET BFSI

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The forced liquidation of more than $20 billion in holdings linked to Bill Hwang’s investment arm is drawing attention to the covert financial instruments he used to build large stakes in companies.

Much of the leverage used by Hwang’s Archegos Capital Management was provided by banks including Nomura Holdings and Credit Suisse Group through swaps or so-called contracts-fordierence (CFDs), according to people with direct knowledge of the deals. It means Archegos may never actually have owned most of the underlying securities — if any at all.

Archegos troubles

While investors who build a stake of more than 5 per cent in a US-listed company usually have to disclose their position and future transactions, that’s not the case with stakes built through the type of derivatives apparently used by Archegos. The products, which are made to exchanges, allow managers like Hwang to amass stakes in publicly traded companies without having to declare their holdings.

The swift unwinding of Archegos has reverberated across the globe, after banks such as Goldman Sachs Group and Morgan Stanley forced Hwang’s arm to sell billions of dollars in investments accumulated through highly leveraged bets. The selloff roiled stocks from Baidu to ViacomCBS, and prompted Nomura and Credit Suisse to disclose that they face potentially significant losses on their exposure. One reason for the widening fallout is the borrowed funds that investors use to magnify their bets: a margin call occurs when the market goes against a large, leveraged position, forcing the hedge fund to deposit more cash or securities with its broker to cover any losses. Archegos was probably required to deposit only a small percentage of the total value of trades.

Massive unwinding

The chain of events set off by this massive unwinding is yet another reminder of the role that hedge funds play in the global capital markets. A hedge fund short squeeze during a Reddit-fueled frenzy for Gamestop Corp. shares earlier this year spurred a $6 billion loss for Gabe Plotkin’s Melvin Capital and sparked scrutiny from US regulators and politicians.

The idea that one firm can quietly amass outsized positions through the use of derivatives could set o another wave of criticism directed against loosely regulated firms that have the power to destabilize markets. While the margin calls on Friday triggered losses of as much as 40 per cent in some shares, there was no sign of contagion in markets broadly on Monday.

Rescues galore

Contrast that with 2008, when Ireland’s then-richest man used derivatives to build a position so large in Anglo Irish Bank it eventually contributed to the country’s international bailout. In 2015, New York-based FXCM Inc. needed rescuing because of losses at its UK ailiate resulting from the unexpected depegging of the Swiss franc. Much about Hwang’s trades remains unclear, but market participants estimate his assets had grown to anywhere from $5 billion to $10 billion in recent years and total positions may have topped $50 billion.

CFDs and swaps are among bespoke derivatives that investors trade privately between themselves, or over-the-counter, instead of through public exchanges. Such opacity helped to worsen the 2008 financial crisis and regulators have introduced a vast new body of rules governing the assets since then.



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RBI extends relaxation for parking fresh G-Secsin HTM category

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The Reserve Bank of India has further extended the relaxation for parking fresh Government Securities (G-Secs) investments made in FY22 in the so-called “Held to Maturity” bucket and also allowed direct retail participation in the primary and secondary G-Sec market.

The aforementioned move is aimed at ensuring that the Government’s ₹12-lakh crore borrowing programme in FY22 sails through without a hitch.

The RBI also decided to continue with the Marginal Standing Facility (MSF) relaxation for a further period of six months — up to September-end 2021, whereby participant banks under the MSF can dip into the statutory liquidity ratio (SLR) by up to an additional one per cent of net demand and time liabilities (NDTL) — cumulatively up to 3 per cent of NDTL. This is expected to unlock ₹1.53 lakh crore liquidity for banks.

The central bank also announced a phased normalisation of the cash reserve ratio (CRR), whereby it will be restored to 3.5 per cent by March 27, 2021 and 4 per cent by May 22, 2021.

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Muthoot Fincorp launches NCDs to raise ₹200 cr

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Muthoot Fincorp, flagship company of Muthoot Pappachan Group (known as Muthoot Blue), on Friday launched its eighth public issue of secured and unsecured redeemable non-convertible debentures (NCDs) to raise ₹200 crore with an option to retain over subscription up to ₹200 crore, aggregating to ₹400 crore.

The funds raised will primarily be used to augment the working capital and requisite lending, said Thomas John Muthoot, Chairman, Muthoot Pappachan Group, and Managing Director, Muthoot Fincorp.

Board approval

The company has received board approval to raise NCDs through public issue in the aggregate amount of up to ₹1,500 crore. The first tranche of the issue with a face value of ₹1,000 each and minimum ticket size of ₹10,000 (10 NCDs), had opened on September 28, 2020 and closed on October 23, 2020.

Also read: Muthoot Finance to raise ₹1,000 crore through NCDs

“The second tranche of the issue with the face value of ₹1,000 and a minimum ticket size of ₹10,000 (10 NCDs) opens now and is scheduled to close on January 25, with an option of early closure or extension in compliance to SEBI debt regulations,” Thomas John Muthoot said.

Demand for gold, MSME loans

There will be nine options with tenure options of 27 months, 38 months and 60 months for the secured NCDs, and a tenure option of 72 months for the unsecured NCDs, offering returns with interest rates ranging from 8.25 per cent to 9.40 per cent. The issue has received credit rating ‘CRISIL A/Stable’ from Crisil.

“Muthoot Fincorp has a diversified portfolio of products that is responsibly designed to empower our customers for their lifecycle needs. In the prevailing market conditions, especially when Indian economy is restarting, we have been experiencing a spike in demand for gold and MSME loans,” Thomas John Muthoot pointed out.

Working capital needs

“In order to enable nano, micro, and small businesses, our target customers, rebound, the company needs the infusion of more working capital and hence the decision to go for an NCD issue. The first tranche was received well by our investors, and we managed to raise ₹397.14 crore,” he said.

Also read: Muthoot Finance to be added to MSCI India domestic index

Muthoot Fincorp, along with sister companies, has lakhs of customers actively engaged with it on a day-to-day basis. “We are confident about the success of this NCD issue, and hope that this will further fuel growth in the economy and add more value to stakeholders, including our investors,” Thomas John Muthoot added.

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