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Lenders seek more collateral for promoter financing on frothy valuation concerns

Money Control

Money Control · 1y ago

Lenders seek more collateral for promoter financing on frothy valuation concerns

Lenders in India are asking promoters to pledge more shares as collateral against their borrowings due to concerns over inflated valuations, particularly in the midcap and small-cap segments. The BSE Midcap and BSE Smallcap indices have seen significant increases in the past year, leading lenders to tighten their financing covenants and collateral requirements. This caution is primarily happening in select areas rather than being widespread throughout the market. Promoters are finding share pledging less attractive as a means of raising funds, with larger promoters ceasing to use this method altogether.

Related News

Lambda secures $500 million loan with Nvidia chips as collateral

Economic Times

Economic Times · 1y ago

Lambda secures $500 million loan with Nvidia chips as collateral

Cloud provider Lambda has secured a $500 million loan from lenders, including Macquarie Group, using Nvidia's high-demand chips as collateral. The funds will be used to scale Lambda's GPU Cloud and purchase Nvidia's H200 and Blackwell AI chips. Startups in the AI market have been attracting private investors as they seek to develop generative AI offerings. The loan, structured as an asset-based financing vehicle, is secured by GPUs and supported by their cash flow generation. Industrial Development Funding and US Innovative Technology are also involved in the loan agreement.

Venture debt options for start-ups on the rise

Money Control

Money Control · 1y ago

Venture debt options for start-ups on the rise

Here's some promising news for start-ups in search of debt financing without the need for collateral or early equity dilution. Despite government efforts to encourage collateral-free loans for start-ups and MSMEs, such initiatives have not gained traction. Entrepreneurs are frequently advised that equity capital is costly, as it often entails relinquishing substantial ownership in their firms to venture capitalists. This early dilution can lead to lower long-term returns on their ventures. Debt financing, often considered a more cost-effective alternative, is, however, seldom accessible to start-ups.

AI infra is a $1.8T opportunity for private credit: Report

YourStory

YourStory · 3m ago

AI infra is a $1.8T opportunity for private credit: Report

As AI becomes more advanced, investment in its infrastructure, including data centers and chips, increases. Private credit firms are stepping in to provide the necessary funding, as traditional banks may not meet the estimated $1.8 trillion needed by 2030. These non-bank lenders offer faster, more flexible financing suitable for tech companies. However, the growth of private credit raises regulatory concerns, with calls for increased oversight to manage hidden risks in these financial markets.

Byju's mulling $400 million sale of Epic to tide over financial troubles: Report

Livemint

Livemint · 1y ago

Byju's mulling $400 million sale of Epic to tide over financial troubles: Report

Indian edtech company Byju's is considering selling its unit, Epic, for an estimated $400 million to overcome financial difficulties and sustain operations, according to sources. Byju's has received three offers for Epic and plans to utilize $80-100 million from the sale proceeds, with the rest allocated for lenders. The company is also exploring other avenues for securing necessary financing. Byju's founder, Byju Raveendran, has reportedly pledged his own and family-owned homes as collateral to raise funds for paying employees amidst a cash crunch. The company has faced multiple challenges, including a delay in salary payments and violation of FEMA rules.

Moving beyond equity! How startups shift to debt financing fuel business growth?

Livemint

Livemint · 1y ago

Moving beyond equity! How startups shift to debt financing fuel business growth?

Startups are increasingly turning to debt financing as an alternative to equity fundraising in order to secure the necessary funding for growth. Debt financing allows founders to retain control and minimize tax outgo, while also offering fixed interest rates and flexible repayment schedules. However, debt funds come with risks such as financial strain and impact on creditworthiness if repayments are not made in a timely manner. Startups should carefully assess their risk tolerance and cashflow projections to strike a balance between debt and equity financing. Various types of debt financing options, including bank loans, term loans, collateral loans, and vendor financing, are available for startups. Debt financing has become a reliable source of funding for startups during times of limited equity investments.

ProsParity raises $2 Mn pre-seed round from BEENEXT, others

Entrackr

Entrackr · 1y ago

ProsParity raises $2 Mn pre-seed round from BEENEXT, others

Fintech startup ProsParity has raised $2 million in its pre-seed round from global institutional investors such as BEENEXT, Sparrow Capital, All In Capital, DeVC, and Huddle Ventures. Angel investors like Dr Ashish Gupta (co-founder of Junglee and Helion Ventures), Raj Dugar (ex-Eight Roads Ventures), Dhyanesh Shah (co-founder of Mosaic Wellness), Abhishek Goyal (co-founder of Tracxn) and Nitin Kaushal (co-founder of Country Delight) also participated in this round. The funds will be used for building proof of concept, technology, and expanding origination networks, starting with central India. ProsParity is also building a comprehensive partnership network across original equipment manufacturers (OEMs), fleet operators, dealerships, and lenders. Founded by Saurabh Khodke and Anirudh Dhakar, ProsParity is an end-to-end electric mobility financing platform that focuses on compliance, scalability, and agility for lenders, while easing access to financing relationships for EV dealers and OEMs to enable financing for their end-customers. Through its proprietary platform and approach of origination, the firm aims to aggregate the demand for financing on a single platform for the lenders to channelize their capital in the emerging EV financing asset class.

What is Revenue-Based Financing? – A Complete Guide 2024

Internet

Internet · 1y ago

What is Revenue-Based Financing? – A Complete Guide 2024

Revenue-based financing (RBF) allows businesses to raise capital without equity dilution, with repayments linked to future revenue. Ideal for D2C startups, it offers flexible repayment plans, quick disbursal, and no collateral. Unlike VC funding or bank loans, RBF is based on business performance, providing non-dilutive funds rapidly to support growth while keeping full ownership intact.

Easy ways to finance your superbike purchase

IndianStartupNews

IndianStartupNews · 2m ago

Easy ways to finance your superbike purchase

Purchasing a superbike can be an expensive endeavor, but various financing options make it more accessible. These options include two-wheeler loans, personal loans, and specialized bike loans for students, which often offer up to 100% financing and flexible repayment terms. Lenders such as banks, NBFCs, and dealerships provide these loans through both online and offline platforms. Prospective buyers should compare interest rates, repayment terms, and eligibility criteria to select the most suitable option for their needs.

Zee Entertainment to raise up to Rs 2,237 crore by issue of warrants

Economic Times

Economic Times · 2m ago

Zee Entertainment to raise up to Rs 2,237 crore by issue of warrants

Zee Entertainment plans to raise approximately Rs 2,237 crore through the issuance of up to 16.95 crore fully convertible warrants at Rs 132 each. The warrants will be allocated to promoter group entities, Altilis Technologies and Sunbright Mauritius Investments. This move is designed to increase the promoter group's stake to 18.39%. An Extraordinary General Meeting is scheduled for July 10 to seek shareholder approval for this preferential warrant issue, subject to regulatory compliance.

US lenders’ consortium files lawsuit against Byju’s founder, others

Economic Times

Economic Times · 4m ago

US lenders’ consortium files lawsuit against Byju’s founder, others

A consortium of U.S. lenders has filed a lawsuit against Byju’s founder, Byju Raveendran, his wife Divya Gokulnath, and adviser Anita Kishore, for allegedly misappropriating $533 million from a $1.2 billion loan. The lawsuit follows a Delaware Bankruptcy Court ruling confirming fraudulent activities. The lenders seek damages for breach of fiduciary duties and other claims, and are also pursuing legal action in India. Byju's has not commented on the lawsuit.

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