Religare offers loans to e-com traders

MUMBAI: Religare Finvest, the NBFC arm of the homegrown financial services group Religare, has carved out a niche in short-term financing for merchants and sellers in the growing e-commerce space in India where some large portals are selling goods worth hundreds of crores in a day. The rise of e-commerce culture in India has thrown open opportunities to fund these small merchants and suppliers, who need short-term finance to churn out more of their goods.
Religare Finvest, which specializes in SME funding, has taken a lead in this emerging space since there is a gap between the time when buyers on sites like Flipkart and Snapdeal make payments and the suppliers get the money for their goods from the portals, Sunil Godhwani, CMD, Religare Enterprises, told TOI in an exclusive interview.
"There are days when orders worth a billion dollars are placed on these sites and, subsequently, the products have to be delivered to the buyers. But by the time the consumer pays it and the manufacturers get paid, there is a time gap. This leads to an interim funding gap, which if bridged, can allow vendors (mainly the small suppliers and manufacturers) to churn out more products. These is short term, supply-side financing which is part of Religare's business," Godhwani said. "We have built a strong understanding of this type of financing and now we are building a very unique model where we lend to these companies against their cash flows which are secured by the parent company site like Flipkart and Snapdeal," he said.
Godhwani said Religare Finvest, the group's NBFC arm, has a very strong underwriting capability for the SME financing segment, and the financing in the e-commerce space is an extension of it. "We see big opportunities in the supply-chain financing space," he said. "In the US, large companies have their own financing arms which fill the same financing void. Here in India, we are doing exactly the same thing by short-term financing for the vendors," Godhwani said.
The Delhi-based financial services firm is also aiming to rapidly scale up its global assets management business, from managing $20 billion worth of assets currently to about $35 billion in the next three to five years.
On the global assets management front, the first of its kind for any Indian company, through a mix of acquisitions and organic growth, Religare has built a business that is present in private equity and venture capital, PE fund of funds, a healthcare trust fund among others. These businesses are managed from outside India. It also manages a domestic mutual fund joint venture that currently has assets worth about $3.2 billion (Rs 20,000 crore). The group is also ready to launch a REIT, a structure that was recently allowed by Sebi, but like most other players is waiting for tax-related issues to get sorted by the government first.
"About three years back, we acquired two American businesses: Landmark and Northgate. Both the businesses have done very well. Landmark, which is a secondary private equity firm, just finished raising over $3 billion," Godhwani, said.
"RGAM (Religare Global Asset Management) took 3-4 years to come up but now has a whole bouquet of services... We are managing $18-20 billion globally," Godhwani said. With the asset management business getting good traction, the Delhi-based firm has now set ambitious targets for its fund managers.
"I think this is the one platform which can grow significantly. Our aim is to take this platform to over $30-35 billion AUM (assets under management) size through acquisitions and natural growth in the next five years," Godhwani said. "Globally, investors feel $50 billion is a decent size for a fund manager and we are at $20 billion now. Some of our new platforms will take 2-3 years to kick in and their AUMs to grow, which will give us a significant size from a market perception. From then on, we would start attracting more capital," he said.