PremiumMUMBAI: Northern Arc Capital, formerly IFMR Capital, a non-banking finance company (NBFC), has launched a debt investment platform for retail investors called Altifi. The NBFC has traditionally acted as a lender to sectors such as microfinance, commercial vehicle finance, affordable housing and medium and small scale enterprises (MSMEs) finance, and has directly lent or raised from investors around Rs96,000 crore since inception.
Retail investors will be able to purchase debt paper through Altifi for ticket sizes as little as Rs10,000. The debt in question will be sold by Northern Arc Capital and will thus be part of a ‘curated basket’ rather than an open platform and will target maturities of 6 months to 6 years.
“By and large we will target the AA to BBB space although we may list unrated papers that we have vetted as well," said Bama Balakrishnan, Chief Operating Officer (COO) at Northern Arc Capital.
“Investors can expect yields of 8-12% pre-tax depending on the credit quality of the paper chosen. The range of debt papers will include Non Convertible Debentures (NCDs), Market Linked Debentures (MLDs) and Asset backed securities. We have issuers such as Shriram Transport Finance, Muthoot Fincorp and Umeed Housing Finance among others," said Ashish Thekkekara, senior director & head, Origination & Digital Business, at Northern Arc Capital.
“We will not charge any fees from investors. We may charge fees from issuers and the debt may be listed at lower yields than what we have got from the issuers. The yields may also have changed from the printed yields in case improvement in the credit profile of the issuer," Balakrishnan added.
The launch follows a growing trend of disintermediation, with fintechs and NBFCs seeing direct investment from individuals for debt listed by them. A wave of risk aversion has reduced the appetite for credit risk among mutual funds. A drop in FD rates has also pushed investors into higher yielding papers.
"Investors can view various debt papers, yields, credit rating and documents like the Information Memorandum (IM) and rating rationale while making their selection. They must then complete their KYC and can pay through NEFT bank transfer or even their debit cards. The bonds will then be credited to the investor’s demat account," said Thekkekara. "They can track various interest payment and repayment dates on the platform"
Northern Arc also manages several alternative investment funds (AIFs) in the credit risk space and has broadly obtained Internal Rates of Return (IRRs) of 12-15% in the past 2-3 years pre tax and net of expenses, said Balakrishnan. “We have survived events such as demonetisation and subsequent difficult periods for credit in India. We will be using our expertise in the curation process for the platform," she added.
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