MICROCAPITAL BRIEF: CredAvenue Issues $45m Market-linked Debenture for Spandana Sphoorty to Boost Microfinance for Women in Rural India

CredAvenue, an India-based firm that connects lenders and borrowers, recently issued a market-linked debenture valued at INR 3.38 billion (USD 45 million) for Spandana Sphoorty Financial Limited, a non-banking financial company (NBFC) providing microloans in India. The participating investors comprise an undisclosed range of corporations, family offices and high-net-worth individuals. CredAvenue arranged the funding through Plutus, its online bond platform. The yield on the bond depends upon the price of G Sec, a benchmark government security, at the time of payout. For example, if the benchmark declines by no more than 25 percent during the 30-month term of the bond, investors will receive an 11 percent yield, but if G Sec declines by 75 percent, investors will receive their principal with no earnings.

Spandana, which is based in the state of Andhra Pradesh, is a rural-focused NBFC microfinance institution. It provides income-generating loans predominantly to women with low incomes, as well as interim loans for customers with short-term needs. The company reported income of INR 14.4 billion (USD 192 million) and total assets of INR 59.4 billion (USD 791 million) for the year ending March 2020. Spandana operates approximately 1,000 branches across 18 states in India. The institution does not accept deposits.

Sarath Bhaskaran, Deputy Vice President at CredAvenue, said the “Plutus platform today offers retail investors a unique opportunity to invest in various debt instruments catering to their lifecycle requirement. One of the products on the platform, viz. market-linked debentures (MLDs) has seen strong traction with retail investors. Our platform has cumulatively placed around INR 2,500 crores [USD 336 million] of MLDs in less than nine months…”. Regarding investors’ exit options, Mr Bhaskaran argued, “There is enough liquidity on Plutus from mutual funds and NBFCs for investors to sell the MLDs before maturity and realize the gains on them.”

In addition to Plutus, CredAvenue offers: (1) a co-lending platform with loan discovery, processing and tracking functions for lenders; (2) CredPools, which facilitates structured-finance transactions; (3) the Supply Chain and Trade Finance Platform, helping businesses access cash early from their pending sales; and (4) CredLoans, a digitized lending platform for public and private banks. Since its inception in 2017, CredAvenue reports having facilitated transactions totaling INR 550 billion (USD 7.5 billion). Its parent company is Vivriti Capital, an India-based NBFC.

By Bradley Shulman, Research Associate

Sources and Additional Resources

Livemint article
https://www.livemint.com/companies/news/credavenue-facilitates-rs337-crore-mld-issue-for-spandana-sphoorty-at-11-yield-11624434514514.html

Spandana homepage
https://www.spandanaindia.com/

CredAvenue homepage
https://www.credavenue.com/

Vivriti Capital homepage
https://www.vivriticapital.com/

Spandana annual report 2019-2020
https://spandanaindia.com/pdfs/Annual%20Report-2019-20.pdf

Previous MicroCapital article on Spandana
https://www.microcapital.org/microcapital-brief-india-based-microfinance-institution-spandana-sphoorty-raises-167m-in-ipo/

Previous MicroCapital article on CredAvenue
https://www.microcapital.org/microcapital-brief-creation-investments-lends-12m-to-berar-finance-srfc-sindhuja-microcredit-of-india/

Did you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/.