Wint Wealth, a Zerodha-backed alternative debt asset platform, on Monday launched Bricks, wherein retail investors can invest in business loans backed by properties. The platform has tied up with U GRO Capital, a non-banking financial company (NBFC) with a credit rating of A. The debt product allows retail investors to invest in secured assets that offer a pre-tax XIRR (extended internal rate of return) of 9.50% per annum with maturity of 18 months.
Since this is structured as a covered market-linked debenture (MLD), the post-tax returns will come at 8.55%, provided that the bond is held for more than one year.
According to the digital investment platform, Bricks is a covered bond asset that provides dual recourse over the investment, meaning if an NBFC were to go bankrupt, investors still remain shielded from the blow through diversification into alternative loans picked by Wint Wealth.
According to Wint Wealth, investors will receive interest and principal payments till the NBFC does not declare bankruptcy. U GRO Capital has issued ₹20 crore worth covered bonds, which is a bankruptcy-protected bond. In case the NBFC is not able to make the payments at maturity, the payments are expected to be recovered from the underlying collateral, which is the cover pool of property loans worth a minimum of ₹25 crore.
“Traditionally, structured debt investment was only available to ultra HNIs with a ticket size between ₹50 lakh to ₹1 crore. At Wint Wealth, we believe structured debt investment should not be limited only to HNIs and UHNIs. With our high-rated asset-backed debt products, we aim to democratize fixed-income assets for retail investors to enter the debt landscape with a ticket size as low as ₹10,000. This helps first-time debt investors to diversify their investment towards debt," said Ajinkya Kulkarni, co-founder of Wint Wealth.
These covered MLDs have been rated AA+ (CE) by Acuite Ratings & Research.
In terms of taxation, equity-based long term capital gains (LTCG) will be levied if investors stay invested for more than a year, irrespective of the investor’s income slab with only 10% charged on the interest.
If you withdraw before, you would be taxed as per income slab.
Investors should note that this is an illiquid product and the liquidity risk is high. “Only if all the bonds sell out and there are more investors in the waitlist for this bond, we might be able to match your withdrawal request against others’ investment requests," Wint Wealth said in a statement.
