Centrum to launch structured credit fund
MUMBAI: The diversified Centrum Group, which is into wealth management, equity broking and credit business with focus on small and medium enterprises (SME) financing and housing, is planning to launch a structured credit fund with an initial corpus of ₹500 crore shortly.
The Jaspal Bindra-run group offers integrated financial solutions under various verticals like the flagship Centrum Capital with its various subsidiaries like wealth management, broking, housing finance, financial advisory, and infrastructure and reality advisory and is present panIndia with 80 branches.
The privately held group also has plans to enter the now lucrative ARC (asset reconstruction company) space given the trillions of rupees of assets up for grabs at the various bankruptcy courts.
But the immediate focus is launching a structured credit fund. We plan to launch it with an initial corpus of at least ₹500 crore and it should be up and running soon after the general elections, chairman Bindra, who owns around one-quarter of equity in the group founded by Chandir Gidwani, told PTI.
On the ARC business plan, Bindra says it can wait.
See, there are around 3,400 companies at NCLTS. Of this only around 400 are resolved or nearing resolution. So what is the hurry? Let the hype settle down and let the assets become more affordable because our present size doesn’t allow us to take huge vulnerabilities.
The market is really big and we’ve enough patience, too. Let the Insolvency and Bankruptcy Code (IBC) settle down first, says the former banker who spent over three decades with Standard Chartered, UBS and Bank of America. Its credit business, which was launched towards the middle of last fiscal, already has a loan book of ₹2,000 crore, of which the SME book is the largest with ₹1,400 crore of assets under management, followed by ₹450 crore in affordable housing.
The proposed structured credit, which will lend credit but fully secured with physical assets, or in effect picking up equity for short-term in the invested company, says Bindra, adding he has already hired the leadership team for this vertical.
As a precursor, Centrum has already done three structured credit deals since January and they will get more aggressive from April.
But the structured credit fund will be operating on a separate business model of investing for the medium-term, he explains.
Already we are working on a few large deals in this space having closed three since January, he says.