Overview – The Aye finance Private Limited Bond on Altifi

Details of the Corporate Bond:

1. Name of the Issuer: Aye finance Private Limited

2. Product: Senior secured NCD (regulated by SEBI)

3.  Yield: 11.00% p.a. XIRR

4. Tenure: ~14 months

5. Min Investment: 1,00,000

6. Interest repayment: Quarterly

7. Principal repayment: Half yearly

8. Rating: India Ratings A-

Key Highlights:

1. Reputed shareholders including Elevation Capital, LGT Capital, Capital G, Falcon Edge, A91 and MAJ Invest who together hold around 90% as of Mar23

2. Strong growth in AUM over the last fiscal to INR 2721 crore in Mar23 from INR 1728 crore in Mar22, at a growth of 57%. As of Mar23, the company had a Net Worth of INR 751 crore

3. Comfortable capitalization levels with Capital Adequacy Ratio of 36% with leverage of 3.2x as of Mar’23

4. Wide geographical presence with 394 branches in 21 states

Overview:

Aye Finance is a new age financing company engaged in lending to Micro and Small businesses, the missing middle. Aye finance offers Hypothecation loans, Quasi Mortgage and Mortgage loans to the MSMEs. They work on an industry cluster based underwriting approach. The company lends to micro enterprises, largely in the manufacturing, trading, dairy (livestock) and services segments for their working capital requirements.

Aye had an AUM of INR 3112 crore and networth of INR 850 crore as on Sep 30, 2023. Operations are spread across Uttar Pradesh, Bihar, Rajasthan, Haryana, Jharkhand, Tamil Nadu, Karnataka, Maharashtra, Gujarat, Uttarakhand, Madhya Pradesh, Odisha, West Bengal, Punjab, Chhattisgarh, Delhi, Chandigarh, Telangana and Himachal Pradesh. As of Sep23, Uttar Pradesh, Bihar and Rajasthan contributed 14%, 13% and 12% respectively of the portfolio.

Promoter/ Management:

Sanjay Sharma- CEO/ Promoter: He heads the organization and directly oversees its Strategy, Risk and Finance functions. He has been in Consumer Banking for over 25 years. Pioneered the start of direct banking channels in HSBC and HDFC Bank in India. Led the operations and service team that launched consumer lending business at ICICI in 1999.

Niraj Kumar Kaushik- Deputy CEO: Niraj is responsible for the business growth of the company along with ensuring superlative portfolio quality. He manages Distribution and Collections functions across India. He has over 25 years of exceptional track record in managing Credit & Risk, Risk Analytics, Sales and Distribution functions in Banking and Financial Services Industry. He has worked in reputable organizations in the industry like Larsen & Toubro, ICICI, ABN Amro Bank and later RBS.

Ujual George- COO: Ujual is responsible for driving operational transformation focusing on sustainable growth and leveraging technology effectively.  At Aye Finance he brings in a comprehensive perspective on all the risks that are faced by the Company. He oversees diverse business operations of the organization spanning Risk, Information Technology, Human Resources and Business Excellence. He has held various leadership positions in his career of over 25 years in banking and financial services.

Key Financials:

All figures in INR crore

Aye’s portfolio is comprised of business loans with an average ticket size of INR 1-3 lakhs. About 63% of the AUM consisted of loans of less than INR 1.50L and 34% of the AUM is of INR 1.5-3L as on Sep23. In terms of tenure, around 60% of the book is in the range of 1-2 yrs and 36% is 2-3 yrs.

Lenders:

The prominent lenders in Aye include:

·       Banks

o   Federal Bank

o   IDFC Bank 

o   AXIS Bank

o   DCB Bank

o   ICICI Bank

·       NBFCs and FIs

o   Northern Arc Capital

o   ResponsAbility Investments

o   Netherlands Development Finance

o   Blue Orchard

o   JM Financial

Disclaimer: The content of this blog should not be considered as financial or investment advice. Readers/Viewers may consult their financial advisor before any investment.