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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 200.00 | ACUITE AA- | Stable | Reaffirmed | - |
| Total Outstanding | 200.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE AA-’ (read as ACUITE double A minus) on the Rs. 200.00 Cr. bank facilities of Avendus Finance Private Limited (AFPL). The outlook is 'Stable'. Rationale for Rating The rating factors in the well diversified products offerings and established presence of the Avendus group in the domain of Investment Banking, Asset Management, Wealth Management, Credit Solutions and Institutional Equities supported by strong and experienced management. The rating also derives comfort from the association with global private equity firm, Kohlberg Kravis Roberts (KKR) which holds 63.04 percent in the holding company Avendus Capital Private Limited. Besides the support by way of equity infusion, Avendus Group also benefits from its association with KKR, KKR has board representation. With a consolidated net worth of Rs 1671.56 Cr. and gearing of 0.43 times as on March 31 2024, the group has healthy capitalization levels and is adequately positioned to support the growth of its businesses. The acquisition of the Institutional Equities business of Spark Capital Advisors (India) Private Limited, deal concluded in Q3FY23. Acuité believes that the acquisition has helped Avendus Group in further diversifying their service offerings and has improved their revenue profile. Going forward, the Group’s ability to improve business and profitability at various business units and manage asset quality and maintain healthy collections will remain key monitorables. |
| About the Company |
| Mumbai based, AFPL (erstwhile Pacific Hire Purchase Limited), is a Non-deposit taking NBFC and is a 100 percent subsidiary of ACPL. AFPL offers customised credit solutions such as promoter funding, corporate finance, structured debt solutions, loan against securities and acquisition finance to the mid-market segment. Avendus Finance Private Limited (AFPL), a wholly owned subsidiary of ACPL and the lending arm of the Group, commenced operations in 2016. It benefits from the strong track record of the promoters in investment banking (IB), healthy capitalisation, and a conservative lending policy. |
| About the Group |
| Avendus Group, promoted by Mr. Gaurav Deepak, Mr. Ranu Vohra and Mr. Kaushal Aggarwal started operations in 1999, through its flagship company Avendus Capital Private Limited (ACPL). ACPL initially made a foray in investment banking and later diversified into wealth management. Gradually, it expanded its presence across other segments to become a diversified financial service provider. Apart from its investment banking and wealth management services, ACPL through its subsidiaries also diversified into management of Alternate Investment Funds and further started to provide credit solutions to mid-market borrowers since FY2016 through AFPL. Avendus group has a fairly well spread presence at eight cities in India, United States and Singapore. ACPL has been able to attract equity investments from Kohlberg Kravis Roberts (KKR) in 2016, to build a multi-asset financial services platform. KKR, (through its Singapore based investment arm Red point Investments Pte. Ltd) holds a majority stake of ~63 percent in ACPL as on March 31, 2024. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profiles of ACPL, AFPL along with other subsidiaries/associates of ACPL (Hereinafter referred to as ‘Avendus Group’) for arriving at the rating. The consolidation is in view of common promoters and management, integrated businesses, shared brand name, and significant operational and financial linkages between these entities. |
| Key Rating Drivers |
| Strength |
| Established presence in financial services and Group Linkages: ACPL’s promoters have demonstrated expertise in Investment Banking and experience of over two decades in focus areas such as technology, consumer, healthcare, digital, IT and outsourcing. Also, the company has hired experienced professionals in the financing, wealth, and asset management businesses. Additionally, it benefits from the experience of eminent professionals on its board. The credit business is led by Mr. Nilesh Dhedhi (MD & CEO of AFPL), who has over 18 years of global experience in financial services. AFPL, the NBFC arm of the Group, has built a loan book of Rs. 1295.00 Cr. as on March 31, 2024 primarily in mid-market segment offering structured finance and Loan against securities. Acuité believes that Avendus Group’s business profile will benefit from its established presence in financial services, synergies across its various verticals and expertise of its top management. Significant synergies across various product offerings; diversified revenue profile from a range of fee based and fund based services: Avendus Group has established itself as one of the leading player in investment banking and wealth management. The Group has been instrumental in supporting various corporates in their fund raising initiatives by virtue of their established presence in the Investment Banking activity since 1999. As a natural corollary to its fee based Investment Banking activity, the Group commenced its NBFC operations through AFPL, to meet the financing requirements of its clients. Though generally sector agnostic, AFPL focuses on providing financing solutions to companies in industrials, healthcare, consumer, digital and technology segments, which have been the key focus areas. The company follows stringent underwriting and undertakes detailed due diligence including financials audits and legal diligence before taking credit decisions. Acuité believes that the Group will benefit from its established business model and the ability to offer a wide range of fee based services and fund based solutions to its clients. Comfortable capitalization levels and resource raising ability: With a consolidated net worth of Rs 1,671.56 Cr. as on March 31, 2024, the group is adequately positioned to support the growth of its new businesses over the medium term. Most of the capital requirement will be in the lending business in AFPL, as other businesses including Investment Banking are fee-based. The gearing policy is conservative for the lending business (AFPL) (0.85 times as on March 31, 2024) and at the group level (0.43 times as on March 31, 2024). Also, the company has a flexibility to raise capital given its predominant experience in Investment Banking. Acuité believes that the company will benefit from the Group’s ability to raise resources and maintain health capitalization at all levels. |
| Weakness |
| Susceptibility of performance to the economic activity and risks inherent in wholesale lending; Limited track record in lending operations: Avendus Group’s revenues from investment banking are primarily linked to the level of activity in the financial markets, such as M & A, PE buyouts, Fresh issuance of securities. Any slowdown in the number of deals and level of activities in the markets will in turn impinge on the operating performance of the investment banking revenues. As regards the financing business of the Group, AFPL commenced its lending operations in 2016 and has been primarily focused on wholesale lending segment. The company offers structured credit solutions, the key offerings are promoter funding, corporate finance, structured debt solutions, loan against securities and acquisition finance. The loans are relatively wholesale in nature with an average ticket size of Rs. 50 Cr. - 100 Cr. and above for a tenure ranging 3 to 5 years. The company had overall loan book of Rs. 1,295.00 Cr. as on March 31, 2024 (Previous year: Rs. 1,330.00 Cr.) across 48 borrowers. While the GNPA and NNPA as on March 31, 2024 are 2.30% and 1.49% respectively, and as on December 31,2024 is Nil. Acuite believes that the performance of Avendus Group will be influenced by the level of activity in the market and performance of the wholesale lending segment. |
| ESG Factors Relevant for Rating |
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Avendus Group has a diversified revenue stream with a majority portion accruing from the financial services sector. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behaviour. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry. AFPL’s board comprises a total of 8 directors out of which 3 are independent directors and includes a female director. Avendus Group maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. The Group also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances, litigations, and regulatory penalties for the group, if relevant. In terms of its social impact, the group is actively engaged in community development programmes through its CSR committee. |
| Rating Sensitivity |
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| All Covenants |
| AFPL is subject to covenants stipulated by its lenders/investors in respect of various parameters like capital structure, asset quality among others |
| Liquidity Position |
| Adequate |
| AFPL has a healthy liquidity position with no cumulative mismatches as per ALM statement dated March 31, 2024. The company has demonstrated ability to raise funds through commercial paper in case of any short-term funding requirement by a borrower. Further, the company maintains excess liquidity in the form of FDs or liquid NCDs/ MFs which can be liquidated in case of any unanticipated business needs. AFPL reported cash and cash equivalent including liquid mutual funds stands at Rs 247.07 Cr. as on March 31, 2024. |
| Outlook |
| Stable |
| Other Factors affecting Rating |
| None |
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| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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