Company Profile: Grip Invest (SEBI Registered OBPP Platform)

Company Profile: Grip Invest (SEBI Registered OBPP Platform)

OBPP stands for Online Bond Platform Providers, a new framework brought in by SEBI in Nov 2022 and Grip Invest is one of the significant players in this space.

Grip Invest today provides listed, rated, and regulated products in the fixed income space, but it didn't begin with those products. Instead, they started as a platform offering asset leasing investment opportunities through the traditional LLP investing model. According to Nikhil Aggarwal (one of the Co-Founders), the idea behind launching such a platform was that approximately ₹100 Trillion was sitting in bank fixed deposits, as Indian retail investors genuinely lacked better opportunities in the fixed income space to earn a higher risk-adjusted return. Grip wanted to solve this problem.

Let's delve deeper into Grip Invest as an alternative investment platform. To write this piece, we had multiple calls with Nikhil Aggarwal to understand how Grip thinks, what his vision is and what are the key challenges/learnings in this industry. You can also listen to our podcast here:

P.S. This is not a sponsored post in any form whatsoever. Our company profiles are completely independent opinions of what we think about the platform. It should not be construed as investment advice or any attempt to malign the name of the company. But after reading the article, if you decide to invest in Grip Invest, we would appreciate it if you could use our referral link.

Corporate Structure & Founders

Grip Invest (Grip Broking Private Limited) was incorporated in January 2023 as per MCA records but Grip as a business has been running since 2020. All operations previously were being run under Grip Invest Technologies Private Limited. Grip's team might have to create a new entity to apply for the OBPP License.

As per the latest MCA filings & Grip's About Us Page on 22nd Dec 2023, Grip's directors are:

Talking about Nikhil, he is director in bunch of other companies:

  1. OBPP Association (A new association formed of all OBPP platforms in the industry)

  2. Electrifi Mobility Private Limited (A new venture started in 2023 in the EV ecosystem which will also bring some good LeaseX deals onto Grip)

  3. Vriksh Advisors Private Limited (The main entity involved in sourcing/structuring deals for Grip Broking Pvt. Ltd., Aashish Jindal is another director here)

  4. Grip Invest Technologies Private Limited (The old entity before they got their OBP license)

  5. A bunch of other LLPs - there are too many to count (most of these are deals that were done before the SDI format)

It's clear Nikhil is a busy individual with his hands in multiple ventures, however it seems that all these ventures are built to serve a common goal i.e. making Grip bigger and better.

All three co-founders met in their previous venture Chalo (a mobility startup). Grip is also a registered stock broker in the debt segment, something that is mandatory to have for the OBP license.

Business Model

Talking about their business model, to be honest it's not that complicated to understand, like any other alternative investment platform, they work with multiple stakeholders in the ecosystem like NBFCs, Startups, Established businesses, etc who are in need of additional capital in the form of debt. The core pieces of their business are:

  • Sourcing attractive corporate debt issues with different risk-reward ratios from existing NBFCs/Lead Managers in the ecosystem. For e.g. The below issue of Navi corporate bonds have been brought to market by Lead Manager JM Financial. Grip has taken a piece of this issue and brought it on to the platform acting as a distributor/debt broker. Grip earns a commission from JM Financial.

  • Creating their own structured products like SDIs (Securitized Debt Instruments) which Grip's team is famous for bringing to the Indian retail investor with minimum investment amount as low as ₹75,000. This has now even further reduced to ₹10,000 as per new SEBI rules. They have sold about ₹200Cr worth of SDIs in the market. Grip usually structures these transactions themselves via their entity Vriksh Advisors or Electrifi Mobility and have better margins/commissions to work around with and make money.

    Grip has SDIs in multiple formats:

    • LeaseX (Pool of Leases or one single lease where the leased assets are hypothecated to the trust issuing the SDI and cashflows are paid to investors as lease payments are received)

    • InvoiceX (Pool of invoices where the receivables are assigned to a trust along with enough cash collateralization to cover potential defaults)

    • BondX (Pool of public/private issued bonds assigned to a trust which issues the SDI)

    • LoanX (Pool of Loans issued by a NBFC like Navi or Incred assigned to a trust with enough cash collateralization to cover any potential defaults)

As per Nikhil "while SDI is new, 70% of investments on Grip are now SDI vs 30% in bonds, reflecting how users are appreciating the superior risk-reward"

Grip Invest being an OBPP platform are restricted in terms of what they can sell, the disclosures they have to make and the way they can market these products, for this we recommend you to read our OBPP article which is much more detailed.

Also, SDIs are a little complicated subject, we haven't yet written on it but we are in the process to write and we want to do justice to that article, till then, you can watch this short video by GRIP.

How to Invest?

Grip Invest was one of the first platform to integrate with the NSE RFQ (Request for Quote), this means that once you have done your KYC on Grip Invest, you can invest normally in any of their fixed income opportunities and you will be dealing directly onto the exchange. Your money will never reach Grip Invest but instead directly go to NSE for real time transaction and the security will start showing up in your demat account on T+1 basis.

Can Defaults Happen?

Yes! Like any other platform, defaults can happen in the opportunities Grip Invest offers as well, Grip offers different kind of opportunities which are rated all the way from AAA to BB offering different level of risks along with the reward.

Credit Rating | Scoring System Chart + Credit Agencies

Source: Wall Street Prep

One of the leasing deals via the LLP method where the issuer was BigSpoon did default as well and made headlines. You can read a news article by Yourstory here.

This particular transaction was not rated since it was via LLP route, Grip now can only deal in listed/rated/regulated instruments due to their OBPP license. The thumb rule for rated instruments is the lower the rating, the higher the risk so you should choose bonds based on how much risk you want to take and not by the returns they are offering.

For the defaulted deal, Grip is trying to recover the physical assets, sell them and return back some principal to the investors but it's not that straightforward, see an update they sent out recently.

Things we like about Grip Invest

  • The very first thing is they are regulated under the SEBI OBPP framework which has very clear defined rules, regulations and dispute resolution frameworks. So no dealing with ambiguous investment vehicles and structures.

  • They are honest, transparent with their investors, this is a proven fact post the Bigspoon default, there were multiple stakeholders who were impacted like Bigspoon equity holders, bankers, etc. but Grip was the first entity to call out the default and also inform the investors. This transparency and clarity is unmatched by any platform.

  • They are in it for the long term, they genuinely want to develop the Indian debt markets and are bringing unique structured opportunities which have a good risk reward ratio.

  • They have multiple opportunities live at any given time with different time horizons and different risk-reward ratios.

  • The minimum investment amount of the opportunity in SDIs are now as low as ₹10,000 and for corporate bonds it's ₹1,000 allowing even a small retail investor to participate in the debt markets.

Things we don't like about Grip Invest

  • Their star product SDIs (Securitized Debt Instruments) deduct 25% TDS from interest payments as per the Income Tax Rules which has is quite off putting if you are in lower tax brackets. They can't do anything about it unless the regulation changes but it is a disadvantage to the investor.

  • All opportunities are shown in IRR (Internal Rate of Return) which can be misleading for bonds as it assumes all interest payment received is reinvested at the same interest rate, which is not always true as TDS payments are also deducted and clearly can't be reinvested at same rate. To be fair this is an industry wide problem and not specific to Grip.

  • For a normal retail investor, ratings are a good metric to check, however what would be helpful for Grip is to show the average default rating for that rating across the overall Indian debt markets. This figure is published by rating agencies regularly and would give a fair idea to the investor on history of defaults for that rating.

Bottom Line

In my personal opinion, Grip Invest is a wonderful platform, certainly the most transparent one which is solving a real purpose, offering product with good risk reward metrics to regular Indian retail investors who only had FDs or Debt Funds as an option before. The founders are incredibly ethical with what they are doing with the business and what their vision is. You should checkout our podcast with Nikhil Aggarwal here to get a feel of it.

If you are just starting out with alternative investments or debt markets, you should definitely check out Grip Invest opportunities and try them according to your risk profile. If you found this piece informative and are signing up for first time on Grip, we would appreciate if you could use our referral link.

We hope this piece was helpful, we will see you in the next one. If you have any questions on this piece, please mention in comments below or join our WhatsApp Community to ask your questions directly where Grip's team members will promptly answer them. You can join the community by applying here.

Please note that this is an opinion blog and not official research advice. I am not a registered RIA in India, and none of these views reflect those of my current employer. This blog aims to promote informed decision-making and does not discourage you from investing in any deals.

We plan to come up with more blogs discussing different types of instruments available in the world of startup investing, write on due diligence for some platforms, and also existing and upcoming alt investment deals in the Indian market. If you want to stay updated on the latest blogs, please subscribe to our newsletter so you get notified automatically.

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