Alternative fixed income platform Grip Invest crosses ₹1,000 crore AUM

Grip Invest, an alternative fixed income online investment platform, crossed ₹1,000 crore in assets under management (AUM) this June, four years after its inception in 2020. Founded by Nikhil Aggarwal, Aashish Jindal and Vivek Gulati, Grip Invest offers investors a diversified portfolio of fixed income options, including lease deals, corporate bonds, and securitised debt instruments (SDIs).

Aggarwal anticipates the next ₹1,000 crore in AUM will be achieved within a year. Grip Invest is not competing with equity investments, such as mutual funds, which are currently popular among retail investors. Instead, the platform aims to tap into the vast pool of funds locked in bank fixed deposits (FDs), a market worth approximately $2.3 trillion (time deposits of ₹1,93,04,013 crore as of May 2024).

Grip Invest’s AUM is evenly split among its three primary investment categories: lease deals, corporate bonds, and SDIs. Corporate bonds offer returns between 10% and 12.5%, with typical tenures ranging from 12 to 24 months. SDIs provide returns between 11.5% and 13.5%, also over 12 to 24 months. Lease deals offer the highest returns, ranging from 14% to 16%, with tenures extending from 24 to 36 months. The platform collaborates with a diverse array of companies for these investment products, from established names such as AGS Transact, a publicly listed cash management company, to new-age firms like Ever Fleet, the largest fleet operator in India and an Uber portfolio company.

Will investors switch from FDs?

One of the key factors driving investors to switch from traditional bank FDs is the significantly higher returns. Additionally, the default rate for these products is exceptionally low at 0.43%, according to Crisil. The platform’s offerings are highly regulated, providing a secure and stable investment option with high liquidity and low risk, making them an attractive alternative to traditional FDs.

"You have the opportunity to make 2x returns with a completely regulated product. It’s a listed product, completely secure," Aggarwal notes. The platform has benefited significantly from recent regulatory changes, which have enhanced the appeal and security of debt investments. The Securities and Exchange Board of India has introduced rules for Online Bond Buying Platforms (OBPP), ensuring the protection of investors’ rights and the smooth execution of bond transactions. Additionally, the reduction of the minimum investment threshold for bonds from ₹100,000 to ₹10,000 has made bond investments accessible to a wider retail audience. Aggarwal highlights the shift in investor behaviour facilitated by these regulatory changes: "The drivers are very different now."

Affluent clientele

Grip is targeting affluent Indians, a demographic that is increasingly seeking higher yields and diversified investment options. The platform’s typical investor falls within the 35 to 50 age range, reflecting a mature, financially savvy demographic. This includes high-net-worth individuals and retail investors, with a roughly equal split in contributions. "We are targeting affluent India users, largely the 6 lakh taxpayers with incomes above ₹8 lakh. This group earns a trillion dollars annually and is likely to allocate some of their money to higher-yielding fixed income options," Aggarwal explains.

The platform has over 26,000 investors contributing to the ₹1000 crore AUM. Geographically, it has participation from about 10% of all PIN codes in India. Top 10 cities account for only 35-40% of total investments, indicating substantial interest from non-metro regions. Aggarwal attributes this broad reach to targeted digital marketing and word-of-mouth referrals, rather than aggressive advertising. "Top 10 cities only account for 35-40% of our investment, which shows a fairly distributed participation for an advanced product category," says Aggarwal.

Growth prospects

Grip Invest has raised ₹100 crore in equity funding to date, with its most recent funding round valuing the company at ₹350 crore. Early this year, Grip raised $10 million, in a mix of equity and debt, led by Stride Ventures. Of the total, $1.5 million comprised venture debt, fresh equity and convertible notes made up for the remainder $8.5 million. The funding, besides existing investors Venture Highway, Anicut Capital and AdvantEdge, saw new investors, LC Nueva and Multiply Ventures, joining the cap table.

The Gurgaon-based company plans to raise additional funds soon to invest in technology to strengthen its application programming interface stack besides hiring talent. Despite its current revenue of ₹9 crore and a net loss of ₹2 crore, Aggarwal is optimistic about the platform’s growth prospects and profitability.

Adding to Grip Invest's expansion, the platform and former Cars24 India CEO Kunal Mundra have launched Electrifi Mobility, a full-stack commercial EV solutions provider. The new venture will partner with lenders, fleet operators, and manufacturers to deliver these services. While Mundra owns a majority stake, Grip has a significant minority stake. Grip Invest users can become retail investors on Electrifi’s platform, leasing their assets to users. Electrifi Mobility will handle due diligence, monitoring, and refurbishment. With the venture, Grip Invest wants to also tap institutional investors, such as banks and non-bank finance companies. Thus far, Grip has invested around ₹200 crore in EV asset leasing, twice as much as other market players combined.

Aggarwal envisions Grip Invest evolving into a major player akin to Yieldstreet in the US, capitalising on the growing appetite for alternative fixed income investments. Founded in 2015 by Milind Mehere and Michael Weisz, Yieldstreet offers retail investors exposure to real estate, marine/shipping, legal finance, commercial loans and other opportunities. After the November 2023 buyout of Cadre, an online real estate-focused investment platform, the two companies have a collective investment value of $9.7 billion. A statement by Yieldstreet says investors on the two platforms have a cumulative exposure of $5.3 billion and have received $3.1 billion in returns as of November 2023.

Grip Invest underscores the potential of alternative investment platforms to transform the financial landscape, offering secure, high-yield options to investors seeking diversification beyond traditional equity markets. Aggarwal believes the platform’s growth will continue to accelerate, driven by repeat investments and an expanding investor base. "We see the platform doubling in size every year," he says, drawing parallels with the growth trajectory of international counterparts. How successful it will be building a business akin to Yieldstreet should be visible in the coming years.