Centrum Financial Services Ltd (CFSL), the NBFC arm of financial services major Centrum Group, has raised ₹50 crore by securitising its supply chain loan book, which was acquired from L&T Finance two years ago. Further, the company is also looking to raise another ₹25 crore through the same route.

The business, which provides financing with an average ticket size of ₹50 lakh to ₹1.5 crore to MSME supply chain dealers and vendors, has raised the funding from Indian high networth individuals, family offices and treasuries among others. However, the names of the investors could not be immediately ascertained.

The funding was raised through Pass Through Certificates (PTCs) issued by a Special Purpose Vehicle of CFSL, which had received a CRISIL A1+ (SO) credit rating (highest rating for a PTC).

“Securitising a supply chain dealer book is an industry first in India. It took us over a year to build the concept and to curate the portfolio,” Ranjan Ghosh, Managing Director and CEO of CFSL said.

“Given the current economic scenario with limited liquidity and re-finance options, NBFCs have found it difficult to sustain growth. Credit-lines and re-finance options from banks have slimmed down and alternate means of financing and short-term borrowings have turned expensive,” he added.

In addition to the securitisation of dealer loans, the company has also pledged supply chain finance vendor loans.

According to the terms of the securitisation, the investors have the first right on the receivables the SPV gets. The risk of default or non-payment by the vendors is underwritten up to a certain amount by Centrum Group, enabling investors earn an interest of about 8-8.5 per cent per annum.

Second round of PTC

Further, CFSL is also in an advanced stage of raising an additional ₹25 crore by issuing a second round of PTCs for its Supply Chain finance business. The company intends to raise the funding before the financial year end.

In 2018, CFSL had acquired L&T Finance’s supply chain business, which had a ₹650-crore loan book, 50 employees and presence across 16 cities in the country. With a total book size of about Rs 2,000 crore, Centrum’s lending businesses comprise affordable housing finance, micro finance and SME and MSME loans.