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

The outstanding debt in our segment is the highest at $230 billion. Second, 70 per cent of that money has been given by either the informal sector or by public sector banks, which are not the epitome of efficiency and customer delight. We sliced the debt as long-term and short-term. To grow, one needs long-term money, which is either equity or term loan. Out of 14,500 companies, 7,500 companies had literally no long-term debt. So, the quality of capital can get more mainstreamed, moving away from the informal and public sector to the private sector, international capital markets, etc. Third, the space requires much more long-term debt than they have access to today, and hence we exist.

I’d say we’d be like Bajaj (Finserv) or HDFC. We want to be super-specialists. While you may see us doing asset management and lending, the motivation for that is product and capital access breadth. It’s not a vanity metric for us. I’m very clear that AIF is the way to go because we get very long-term, patient capital. I want to add bonds, loans, securitisation, working capital, commercial paper as my offering to a mid-corporate, or raise money for quality international and domestic funds, including banks. We have no interest in being a bank.

We cannot overreach ourselves beyond where we are today. When I say that my exposure is Rs 15 crore on an average or Rs 40 crore at peak, it indicates the profile of company we lend to.

The top 20 exposures should remain below 50 per cent of net worth. As the net worth expands, maybe I can take a slightly larger exposure, but I have to be very controlled. If the average exposure is Rs 15 crore, by September it will be one month of profit. Currently, my monthly profit is Rs 12 crore.

CredAvenue and Vivriti have, over the last three years, steadily reduced dependence on each other. Until August 2020, we were one company and one business. By March 2021 not a single person in each company was common. By June 2021 we separated IT servers, so that no data would be shared. We also asked KPMG to design contracts that they would sign off from a related party perspective. Steadily, we reduced business dependency. Today, around 11-12 per cent of origination for Vivriti happens through CredAvenue and Vivriti is deploying capital for 7 per cent of CredAvenue’s business. Gaurav and I were concerned about the way in which fintechs had developed between 2014 and 2018, where the NBFC was typically held hostage to the platform. Therefore, even before the separation, Vivriti did not do a single rupee of underwriting, buyback, first-loss or a co-participation on any deal on CredAvenue. We may have disbursed Rs 20,000 crore cumulatively so far, but we don’t share deals.

That’s the direction we will take; whether it is three or five years down the line, is arguable. It’s one milestone we will have to cross because investors that we’re working with, need to see an exit at some stage. But before that, we have to innovate, go deeper, add more products, improve our access to capital and significantly scale up our asset management company.

I recently met the MD of a large NBFC who said ‘5 per cent is not enough for me…’. It’s about your risk models. We have been running expected credit-loss risk models on these companies for at least six to eight quarters. I can tell a company that I expect your ECL to be 8 per cent, you are giving me 5% as cash in a separate ring-fenced fixed deposit. Balance, I will extract through pricing. But for that I need to have data, risk infrastructure, a tested model, conviction and a relationship with the borrower. Without these things, it’s all theory. The regulations have been a significant shot-in-the-arm. We have clarity, and clarity on regulations is more important than the regulation itself. We will also see some non-serious players getting weeded out.