India’s debt capital market is valued to be around 67 percent of its Gross Domestic Product (GDP). Nonetheless, it is known to be notoriously difficult for anyone, apart from large, top-rated corporates, to access these markets.
After having worked for over a decade in the structured finance space in India, Gaurav Kumar and Vineet Sukumar learnt about issues plaguing the current structure of the debt market’s ecosystem such as information asymmetry, the mismatch between actual and perceived risks, and the opaqueness in price discovery.
With the firm belief that technology-driven solutions could address these issues to bring true scale to India’s domestic debt capital markets, the duo launched Vivriti Capital in Chennai in 2017. The company has since serviced more than 200 enterprise issuers, three lakh retail clients across 15 sectors, enabled Rs 27,000 crore of debt deals and has a non-banking financial company (NBFC) book of over Rs 1,000 crore.
Bringing scale and accessibility to debt markets
Driving Vivriti Capital’s vision to reality is its home-grown, proprietary, credit platform — CredAvenue. Since its launch in 2017, it offers a host of debt and structured finance products.
The founders believe that the debt capital markets in India are at the same position where equity markets were around two decades ago. To that end, CredAvenue aims to bring greater scale and accessibility to the debt ecosystem by bringing better deal discovery, price discovery, execution and post settlement risk monitoring.
“From day one, our objective has been to create CredAvenue as a piece of market infrastructure in the enterprise and retail debt space. Technology, to us, is the lever that can help achieve scale, depth and inclusiveness in debt markets cutting across sectors. Our platform addresses both the transaction as well as the credit and risk aspect of a lender-borrower engagement, which thus sets it apart from any other model,” says Gaurav.
With a focus on understanding user requirements and using constant innovation to deliver an excellent user experience, Vivriti Capital has rolled out many unique features on the platform, which are as follows:
Credit and risk management capabilities: The platform’s data science driven approach ensures that lenders have full visibility of their portfolio performance across all their transactions. The power of predictive models, data triangulation tools, on-field observations, constant management discussion updates and robust performance analysis are leveraged so that investors and lenders have complete control over their portfolio with dynamic and constant risk management.
Structuring and execution capabilities: The platform is equipped with auto structuring features that make deal structuring and its execution for complex products such as securitisation and non convertible debentures (NCDs) a fast and efficient experience. CredAvenue has also facilitated the transaction of innovative structured finance products such as covered bonds, time-tranched securitisation, issuance of Masala Bonds, ECBs, among others.
The creation of a unique ecosystem: With the widest range of issuers, investors, rating agencies, trustees, among other stakeholders, CredAvenue has created a debt/capital market ecosystem on a single forum. This facilitates the right match between issuers and investors, thereby making the debt markets more broad-based and inclusive. This also ensures end-to-end execution of transactions with a quick turnaround time.
Capturing the future potential of debt markets
Currently, CredAvenue caters to stakeholders from diverse segments ranging from financial institutions in microfinance, CV Finance, housing, gold, SME, agri finance to corporates across the pharma, branded retail, food, and logistics sectors. The turnover of the entities it services ranges from Rs 10 crore to Rs 1,000 crore. The technology and product choices that Vivriti Capital has made so far are showing significant returns. Till date, CredAvenue has facilitated debt market transactions worth Rs 27,000 crore.
“Our model of core risk management, coupled with the power of technology has enabled business in the toughest of times. We have witnessed two debilitating crises since we started, and emerged stronger,” says Vineet.
Its diverse product offerings, and the efficiency of its execution engine enabled Rs 3,000 crore debt funding even during the Covid scenario since March 2020.
But the Vivriti Capital team sees this as only the tip of the iceberg. It aims to become the number one technology-enabled platform for credit in India with a cumulative deal flow of Rs 100,000 crore by FY23 across institutional and retail segments. To that end, the company also has been registered as an NBFC and an asset management company — Vivriti Asset Management (VAM). The DNA of VAM is different as it offers an opportunity to investors to increase allocation to fixed income assets.
“Vivriti Asset Management is a key element of our strategy to bring in long term patient capital to CredAvenue, especially global capital, through enabling structures that allow pooling of risk,” says Vineet.
With an aim to further tap into the potential of debt markets, the company will significantly ramp up the platform by investing heavily in artificial intelligence, machine learning, and analytical solutions that will offer investors cutting-edge decision making tools, a recommendation engine and risk analytics. Vivriti Capital believes these technological innovations will help continuously better the lives of all its clients through customised financial solutions.
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