An important risk mitigant in the transaction was that money due from anchors was escrowed to minimise commingling of funds. (Representative image)Fintech platform CredAble and non-banking financial company (NBFC) Northern Arc Capital on Monday announced the closure of what has been touted as India’s first invoice-backed securitisation transaction. Invoice financing is one of the oldest financial products and has traditionally been dominated by banks and a few NBFCs.
Under the transaction, 10 vendors (suppliers) on the CredAble platform discounted invoices that were raised to several large anchors (buyers) by assigning invoice receivables to the securitisation trust.
The transaction was structured by Northern Arc. An important risk mitigant in the transaction was that money due from anchors was escrowed to minimise commingling of funds. The transaction also has a ramp-up feature under which the invoice cash flows can be reinvested to purchase a fresh set of invoices that meet pre-defined eligibility criteria. The transaction size was Rs 15 crore and the senior tranche was awarded the highest possible short-term rating A1+(SO) by the rating agency.
Kshama Fernandes, MD and CEO of Northern Arc Capital, said “We are delighted to partner with CredAble for structuring of this landmark transaction. The structure will allow corporates to access the securitisation market which has so far been mostly dominated by NBFCs. The structure allows investors to take indirect short-tenor exposure to corporates which may not have typical borrowing requirements. This helps in diversification of their overall portfolio…”
Nirav Choksi, CEO of CredAble, said: “CredAble has a vision to enable large-scale liquidity programmes for enterprise clients partnering with the entire financial ecosystem, including capital markets, and this is a huge step towards fulfilling that vision. The structure will open the short-term supply chain financing asset class to capital market investors, as well as non-traditional investors, UHNIs and FPIs.”
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