We want to be super-specialists in wholesale business: Vivriti Capital 

Debt outstanding in our category is the highest at $230 billion. Secondly, 70 percent of this money was provided by informal sector or public sector banks, which is not an example of efficiency and customer delight. We have divided debt into long-term and short-term tranches. For growth, one needs long-term money, which is either stocks or term loan. Of the 14,500 companies, 7,500 did not have long-term debt. Therefore, capital quality can be further generalized, moving away from the informal and public sectors to the private sector, international capital markets, and so on. Third, the space requires far more long-term debt than they can access today, and thus we are.

I would say we will be like Bajaj (finserve) or HDFC. We want to be super specialists. While you may see us doing asset management and lending, this is driven by our broader access to capital and product. It is not a measure of vanity for us. I’m very clear that AIF is the way to go because we’re getting patient, long-term capital. I want to add bonds, loans, securitizations, working capital and commercial papers as my offering to a medium company or fundraising for high quality international and local funds, including banks. We have no interest in being a bank.

We cannot go beyond ourselves than we are today. When I say my exposure is Rs 15 crore on average or Rs 40 crore at peak, it is referring to the profile of the company we are lending to.

The top 20 exposures must remain less than 50 percent of the net worth. As my net worth expands, maybe I can take a little more exposure, but I have to be very in control. If the average exposure is Rs 15 crore, then it will be one month’s profit by September. Currently, my monthly earning is Rs 12 Crore.

CredAvenue and Vivriti have, over the past three years, steadily decreased dependence on each other. Until August 2020, we were one company and one business. By March 2021, not one person in every company was popular. By June 2021 we have separated the IT servers, so that no data is shared. We also asked KPMG to design the contracts they would sign from a related party perspective. Consistently, we have reduced reliance on business. Today, approximately 11 to 12 percent of Vivriti’s creation is generated through CredAvenue and Vivriti deploys capital for 7 percent of CredAvenue’s business. Gaurav and I were concerned about the way fintech companies developed between 2014 and 2018, as NBFC is usually held hostage to the platform. So, even before the split, Vivriti had not made a single rupee to subscribe, buyback, first loss or participate in any deal on CredAvenue. We may have cashed out Rs 20,000 crore cumulatively so far, but we are not deal-breaking.

This is the direction we will take. Whether three or five years down the line is debatable. It’s a milestone that we’ll have to cross because the investors we work with need to see a way out at some point. But before that, we have to innovate, dig deeper, add more products, improve our access to capital, and significantly expand our asset management company.

I recently met the Managing Director of a large NBFC who said “5 percent is not enough for me…”. It comes down to your risk models. We’ve run ECR models on these companies for at least six to eight quarters. I can tell the company that I have an ECL of 8 percent, and you give me 5 percent in cash in a separate, fence-marked fixed deposit. Balance, I’ll extract through pricing. But for that I need data, risk infrastructure, tested model, conviction and relationship with the borrower. Without those things, it’s all theory. The regulations were a shot in the arm. We have clarity and clarity about the regulations is more important than the regulation itself. We’ll also see some not-so-serious players being disqualified.