Partner Performance Report 2022

Lease financing has been known for many years, but it was predominantly offered to large companies like Reliance Industries by NBFCs and other financial institutions. In 2020, Grip brought this offering as an investment product for individual investors - from young working professionals to millennials. 

Since its inception, Grip has partnered with 70+ venture-capital backed high growth companies to enable asset-backed financing through two investment products: (i) Lease Financing; and more recently (ii) Inventory Financing. 

This report provides insight on the overall breakup of investments and financial performance of these partners. It is based on the financial data of FY22. 

Breakup of Investments

The Lease and Inventory Financing opportunities are spread across a diversified range of products comprising electric vehicles, furniture, apparel, warehouse equipment, etc.

The partners, companies such as Udaan, Furlenco, Battery Smart, Stanza Living, Blue Tokai, etc., represent an equally diversified range of industries. 

Grip has enabled investments of INR 195 Cr through Lease Financing and INR 32 Cr through Inventory Financing for these companies and returned INR 67 Cr in lease receivables to investors. 

The sector-wise breakup of investments made on Grip’s platform is shown below.

Revenue Analysis

The partners reported a total revenue of nearly INR 2,600 Cr, which represented a growth of 62% in FY22 (vs. FY21). 

Ninety six percent (96%) of the partners have seen a growth in revenue during FY22 (vs. FY21). Revenue for 24 of Grip’s partners grew by more than 150% in FY22. 

Revenue for 44% of partners grew by more than 150% in FY22 (vs. FY21). Only 3.6% of partners reported a decline in revenue in FY22 (vs. FY21) and they did so on account of downsizing some of their loss-making verticals to improve profitability.

_{Based on the FY22 data received as of 9 May 2022}

EBITDA Margin

_{Based on the FY22 data received as of 9 May 2022}

• 67% of partners have seen an improvement in their EBITDA margin whereas 33% have seen a contraction in the EBITDA margin
• Margins improved due to various cost saving measures adopted by the companies (such as downsizing of loss-making verticals, centralization of operations resulting in reduced overheads, etc.). Apart from this, higher revenue (supported by new product launches, expansion across geographies, etc.) also facilitated the margin improvement.
• Contraction in margins was on account of higher direct cost (material cost) and indirect cost (primarily employee benefit expense; most of these companies increased their staff headcount due to expansion)

Factors Attributing To The High Performance of Partners

• Presence in certain sectors which have strong underlying business drivers is seeing outperformance as opposed to a broader industry (on account of adoption of new technology and changing consumer behavior); for e.g., adoption of electric vehicles, secular growth in e-commerce, and a shift in consumption patterns to subscription model (versus the ownership model). 
• Focus on partners with B2B business models which have long term, fixed price/quantity contracts from well-established enterprise clients. Within the B2C space, companies that have demonstrated strong customer loyalty as well as the ability to diversify and expand their product offerings have outperformed their peers.
• High quality management teams, backed by marquee investors, that could raise additional capital to finance their operations and growth.
• Since most of these partners are early-stage growth companies, increase in scale of operations, expansion of business across multiple geographies, increase in customer base have been the growth enablers.

Capital Raised

Grip’s partners have raised more than $400 million of equity and ~$66 million of debt in FY22 from marquee financial institutions such as Sequoia Capital, Elevation Capital, Qualcomm Ventures, Accel Partners, CLSA Capital Partners, Alteria Capital, Chiratae Ventures, Anicut Capital, Y-Combinator, Blacksoil, Northern Arc, Innoven, etc.

While there have been isolated instances of 1-2 days of delay in payments from a few partners, Grip has ensured that investors continue to receive timely returns through the credit enhancement package put in place, which includes (but not limited to) a security deposit from the partners. 

To Conclude

A significant majority of the portfolio companies are fundamentally strong and competitively placed to ensure business continuity and growth. Grip will continue to monitor the performance of its portfolio companies and endeavor to maintain a low default risk, while exploring new opportunities for its investors.