Alternative investment platform Grip has announced another third Securitized Debt Instrument (SDI) as a debut investment-grade offering, with a CRISIL-rated and profitable lessee, Everest Fleet. This is the third of its kind product to be launched by Grip with the issuance offering, a SEBI-regulated product, listed on NSE. According to Grip, the third SDI instrument is not only completely insulated from stock market volatility and conditions but also falls in the category of high-yielding fixed-income debt with contracted monthly repayments from a lease transaction that ensures a fixed return. In an email interaction with FE PF Desk, Nikhil Aggarwal, Founder & CEO, shared details of the new investment product and how it will benefit investors. Edited excerpts:
How will SDI 3 benefit retail investors?
We launched our third SDI tranche in November 2022 as our debut investment-grade offering which enabled investors to access the corporate credit of the largest fleet operator of cabs on Uber’s India platform in the form of monthly lease rental payments. The lessee is EBITDA and PAT positive and has a pan-India presence with operations in over 7 cities.
By offering an investment-grade opportunity, Grip endeavours to cover the broader risk-reward spectrum for individual investors. This transaction also underlines the growing appreciation among large, profitable companies for the role retail investors can play in their access to non-dilutive growth capital.
Is it better than Corporate NCDs?
Grip’s November 22 SDI Tranche paves the path for more ‘investment grade’ alternative-investment opportunities. SDI is quite distinctive from your run-of-the-mill debt investment options like corporate NCDs as most such debt investment options return capital only at the end of the tenure, and investors are on the hook for the entire tenure i.e. payback period is equal to the full term of the NCD.
In the case of SDI, however, ~40-45% of the capital gets returned every year, and the investment keeps getting de-risked as the tenure passes. The payback period is about 66% of the tenure of the transaction.
Can you name the diversified companies/ industries backing Grip SDIs?
Up until now, Grip has brought SDIs backed by lease payments from lessees operating in the following industries:
- 2W EV fleet operators;
- Cloud kitchen operators;
- Battery Swapping
- Furniture Rentals
- 4W short-term rental/ cab fleet operators
We intend to bring more opportunities focussing on ESG investment themes, circular economy themes, and industry diversification themes.
Why have you launched this product? How much returns one can expect?
With this product, Grip intends to provide its community of 2,50,000+ investors access to opportunities to diversify their portfolios with attractive returns that are not correlated to the stock market, as well as differentiated from other debt instruments considering (a) capital is returned every month, and (b) SDI returns are highly competitive and beat comparable rated instruments by 200-400 bps.
Today, retail investors are dealing with a lot of hurdles during investment. One example is high inflation, which unfortunately has an almost uniform impact on all investments – it tends to reduce the real value of returns. If the rate of inflation exceeds the rate of return, the investor’s money continues to lose its purchasing power over the investment period. Products like SDI help offset the impact of inflation.
What are the numbers & deal size for the launch, partners involved in it?
For the November 22 Tranche, Grip entered into an operating lease arrangement with Everest Fleet, and securitised lease payments of INR 10+ crores to be paid over 3 years. The new SDI opportunity attracted INR 8+ crore in less than 48 hours. Through our SDI offerings, we have enabled investments aggregating over INR 25 crore since launch in just the last 2 months.