LegalPay launches Interim Finance Bonds for retail investors

By Leandra Monteiro

LegalPay, India’s first litigation funder launched Interim Financing Bonds where retail investors can invest through its platform with a minimum investment of INR 10,000 and earn attractive and high-yielding returns.

The tech-based FinTech firm, which is also an interim financier investing in commercial litigations and insolvent companies, said that the Interim Financing bonds are fixed-income instruments to finance the expenses of the companies undergoing CIRP. With an issue size of over INR 3 crores, these bonds have a credit rating of BBB- and have undergone stringent due diligence and risk assessment process with asset cover of 100x.

Talking about the Interim Finance bonds, Kundan Shahi, CEO of LegalPay said, “Opening such investments to retail investors will act as a step towards democratising equity markets investing and providing diversification benefits to retail investors. Retail investors usually have access only to traditional securities, primarily listed equities or fixed deposits.”

He added, “There has been a spurt in the emergence of different kinds of Corporate bonds in India with the overall market pegged at around INR 11,500 crores. Corporate bonds provide higher and safer returns to investors and LegalPay is the first platform to provide Interim financing bonds.”

“These bonds will open up another investable asset in the potential basket for retail investors. This helps them gain exposure to a level of risk which lies between the risk present in listed equities or fixed-rate investments. This is a very imperative step to have efficient markets,” Shahi added.

Companies undergoing insolvency require funds to remain afloat and cover their day-to-day expenses. Although, during the time of insolvency, the company is run by a resolution professional who has limited or no funds. Therefore, resolution professionals require funds to maintain the maximum value of assets and pay salaries and wages to workmen and employees, professionals, etc. Such finance is raised by resolution professionals in the form of interim finance during the corporate insolvency resolution process. These funds help the resolution professional in running the operations and processes efficiently.

Interim Finance is a part of the corporate insolvency resolution costs. Hence, it has been given super-priority at the time of repayment. Therefore, the investments provided in the form of interim finance are guaranteed first-priority status and backed by IBC Code.

The Interim Financing Bonds will allow retail investors to diversify their portfolios on LegalPay’s platform and enjoy the benefits which were only available to the ultra HNIs before. Retail investors can invest in such bonds with a minimum investment of INR 10,000 and have an extraordinary coupon rate of 14% giving investors an opportunity to reap substantial profits.