Vivriti Capital concludes securitization deal for FIVE STAR Business Finance

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Vivriti Capital is India’s first tech-enabled online marketplace offering customized debt products to institutional clients.

Vivriti Capital concluded the INR 118 Crore securitisation deal for Five-Star Business Finance Limited through its online debt platform. The issuance was subscribed to by a large private sector bank. The underlying pool consists of loans given out predominantly for small businesses with an average ticket size of INR 3–4 lacs. The deal received a provisional rating of AA-(SO). This is first securitisation transaction for Five-Star Business Finance Limited, a Chennai headquartered NBFC catering to small business customers in the urban and semi-urban markets.

Highlights:

• Reaffirms investors’ confidence on high quality NBFCs despite liquidity crunch
• Underlying pool consists of loans for small businesses
• Loans with an average ticket size of INR 3 Lacs
• Deal receives provisional rating of AA-(SO)

This transaction reaffirms the fact that well performing NBFCs can raise funds even in the current liquidity situation. It also highlights the importance of innovative deal structures that blend risk management and incentive alignment to further strengthen investor confidence. Five-Star is a Chennai headquartered NBFC catering to small business customers in the urban and semi- urban markets with a focus on small ticket loans for business purposes. It is backed by Investors such as Matrix Partners, Morgan Stanley, Norwest Venture Partners, Sequoia Capital and TPG. The company had 173 branches, portfolio outstanding of Rs. 2073 crore (standalone) and a very stable asset quality of sub 1% Gross NPA as of March 201.9

Commenting on the success of the deal, Srikanth, CFO-Five Star, said “This transaction clearly establishes the fact that NBFCs with robust business model, strong credit norms and good asset quality will be able to attract debt capital irrespective of the liquidity conditions. Thanks to the entire Vivriti team, and specifically to the “Marketplace”, their state-of-the-art online debt platform, which have been great enablers for this transaction.”

Irfan Mohammed, CBO, Vivriti Capital, said “We are delighted to be part of Five Star’s first securitization deal. This deal revalidates the confidence that the market has on Five Star and opens new funding avenues for the company. This transaction is a result of good structuring and execution on our online credit platform that optimally factors in requirements of the issuers, the investors and all other stakeholders.”

Vivriti Capital has emerged as the largest online platform for institutional debt in India with over 150 clients and transaction volumes till date of over INR 15,000 Crore. The platform has enabled debt transactions of over INR 2600 crore in the first quarter of FY20 despite the difficult liquidity situation. Around 50 percent of the company’s total strength comprises tech professionals, which corroborates its tech first approach.