TruCap default sparks fresh concerns over bond portals

TruCap Finance defaulted on interest and principal payments on its ₹150 cr NCDs due 16 July

- Neil Borate & Sashind Ningthoukhongjam

On 18 July, CareEdge Ratings downgraded ₹150 crore worth of TruCap Finance bonds to 'D', or default, along with ₹750 crore of long-term bank facilities. The ratings agency cited the company's failure to pay interest and principal on its non-convertible debentures (NCDs) due on 16 July. This has left a trail of investors in distress, as these bonds were widely distributed through online bond platform providers (OBPPs) such as GoldenPi, Grip Invest, Alitifi (by Northern Arc), and BondsIndia.

These NCDs were first issued in January 2024 via Northern Arc, with subsequent tranches distributed through other platforms. Originally rated BBB and offering coupon rates of 13-13.5%, the bonds were sold in ticket sizes as low as ₹1 lakh.

TruCap, a listed non-banking financial company focused on gold and loans for micro, small and medium enterprises (MSMEs), saw its stock plunge 61.4% over the past year (as of 18 July). It was in the process of being acquired by Marwadi Chandrana Group, but delays in committed fund transfers played a role in precipitating the default.

A person familiar with the matter estimated that around 1,100 investors were impacted, adding that the total outstanding principal owed to investors stands at around ₹55 crore.

A spokesperson for TruCap said the company is committed to repaying all dues in full.

The company has ₹370 crore of net debt outstanding, of which ₹270 crore is not NCDs. As for the default of ₹72 crore of NCDs, the company repaid 15% between 18 and 21 July, the spokesperson said.

TruCap has been at the centre of acquisition talks in recent months. InCred Finance was set to purchase its gold loan portfolio via a slump sale in February, but the transaction did not materialize as the Marwadi Chandrana Group wanted to acquire the entire company along with the gold portfolio.