9.5% Wint Wealth Bricks July 2021 – Covered Market Linked Debentures (MLD) – Should you invest?
Wint Wealth Bricks July 2021 – Covered Market Linked Debentures (MLDs) – Review
Wint Wealth (Zerodha backed alternative debt asset platform) has launched Bricks July 2021 Covered Market Linked Debentures which offers high returns of 9.5%. These debentures are covered by collateral properties. We have covered about this market linked debenture bonds earlier where there are several points an investor should consider before investing. What is Wint Bricks July 2021 covered market linked debentures all about? Should you invest in Wint Wealth Bricks July 2021 Covered Market Linked Debentures that offer 9.5% interest rate? Is it safe to invest in Wint Bricks Covered Market Linked Debentures?
About Wint Wealth
Company indicates that their goal is to bridge gap between low-risk low return vs high risk high return investment options. They say its aim is to provide with moderate returns to high returns with risk is between high and low (like moderate).
Company was founded by some of the members from IIT and is backed up by big shots like Nithin Kamat (Zerodha), Kunal Shal (CRED), Praniv Yadav (Paytm money) etc.
It started offering market linked debentures (MLD) from 2020 onwards. Till now it has issued 5 Covered Market Linked Debentures and 1 covered bond / market linked debenture is in progress now.
Key Features of Win Wealth Bricks July 2021 (Covered Market Linked Debentures)
Wint Bricks July21 is the name of the product offered by Wint Wealth.
Wint Bricks July 2021 asset is being launched on 30-July-2021. These would be available to existing Wint Wealth customers and their referrals on priority basis. For all other investors it would open from 31st July 2021.
These Covered MLDs are issued by its partner Ugro Capital Limited, NBFC company through Wint Wealth. Means, Wint Wealth is working as a mediator / broker for such transactions.
The tenure of these Covered Market Linked Debentures are 24 months i.e., maturity date is 21-July-2023.
Pre-tax returns are expected at 9.5% per annum.
This is tax efficient product where one need to pay only 10% on the returns if investor holds for > 12 months. These are taxed like equity.
This asset has an underlying collateral of property of loans which is minimum of 1.3 times the issue of Covered Market Linked Debentures. The size of the issue is Rs 20 Crores and collateral size is Rs 36.2 Crores (minimum 1.3x criteria met).
Interest would be paid on maturity after 24 months.
Minimum investment in Wint Bricks July 2021 asset is Rs 10 Lakhs.
NBFC Ugro Capital (on behalf of whom Wint Wealth is issuing these MLD), is rated as A (Stable) by Acuite Ratings.
How to invest in Wint Wealth Bricks July 2021 Covered Market Linked Debentures?
You can follow below steps:
Visit Wint Wealth Bricks July 2021 asset link
If the issue is still not yet opened, it would ask you for WhatsApp and email ID and you need to click submit button.
If the issue is open, you can visit the block where it says “Start Investing”
Select the no. of lots you want to invest
Click on “invest now”
Enter your phone number and enter OTP (if you already logged in, skip this and next line item)
Enter your name and email ID and click on sign-up
Enter your KYC details. This includes Demat account no, bank account number, IFSC code etc., Your interest payment would be paid to this bank account number.
It takes you to couple of more steps and to your bank account where you need to transfer funds.
The process might have couple of more steps to finish.
If you are already an existing user, just login and follow the asset link and make payment.
Who is U Gro Capital?
This debenture bonds are issued on behalf of U Gro Capital, hence it is important to understand the company. U Gro Capital is BSE listed technology company which focuses on addressing capital needs of small businesses operating in select sectors with customized loan solutions.
Company has been rated as A (Stable) by Acuite Ratings. Here is the AUM, Gross NPA and Net NPA of the company.
How does this asset compare to other alternative options?
A quick comparison with all other investment options (Source: Chart provided along with product details on Wint Wealth website)
Did Wint Wealth offered such debenture bonds earlier?
Yes. They have offered following market linked debentures in the recent past.
1) 10% Wint Gold Aug 2020 – Offered by IIFL NBFC that has maturity in Feb-2021. These are repaid back now.
2) 11% Wint Gold Dec 2020 – Maturity in June-2022. These are 100% subscribed.
3) 10.25% Wint Wheels Mar 2021 for Rs 20 Crores Maturity in Mar-2023. These are 100% subscribed.
4) 9.5% Wint Bricks May 2021 for Rs 20 Crores Maturity in Nov-2022. These are 100% subscribed.
5) 11% Wint Gold Jun 2021 for Rs 15 Crores Maturity in Sep-2022. These are 100% subscribed.
What is the Cover Pool / Collateral of the bonds?
The cover pool of bonds is characterized across regions and industries as indicated below. These are specific to the Ugro Capital.
Why should you invest in Wint Wealth Bricks July 2021?
Here are some reasons to invest:
1) This asset would provide high returns of 9.5% per annum. If you observe, debt funds or bank fixed deposits offer low returns of 5% to 6.5%.
2) This is tax efficient investment option. Investors need to pay only 10% tax if held for > 12 months. The post-tax returns would be 8.55% per annum. If investors hold for < 12 months, the returns are taxed as per income tax slab applicable to them.
Why NOT to invest in Wint Wealth Bricks July 2021 Covered Market Linked Debenture Bonds?
Here are few negative or hidden factors of this instrument.
1) While all other Wint Wealth issues have minimum investment of Rs 10,000, this issue has minimum investment of Rs 10 Lakhs. It would be difficult for small retail investors to participate in this.
2) There is credit risk in this investment. While these instruments are covered by pool of assets, in case the NBFC company goes bankrupt, the process of liquidation of these assets might take longer time. One should recall what happened to DHFL secured NCD bonds investors. They are still waiting for their investments to be returned along with interest.
2) These are not liquid investments. You cannot sell them in the open market or to Wint Wealth before maturity. However, Wint Wealth gives an option to withdraw and if new buyers are available, these would be transferred to them.
3) Remember that in case the lender goes bankrupt, investors would get their principal investment and accumulated interest in maximum period of 96 months.
4) There could be fraud risk in this covered bond. While it shows there are underlying collateral properties, but these might not exist. In such a case, investors would lose money.
5) The credit rating of this instrument is A (Stable) by Acuitie Ratings which is very low. Such ratings can further fall to “B” without any alert to investors. Investors should always invest in AAA rated fixed deposits / bonds which are one of the safe investment options.
Should you invest in Wint Bricks MLD July 2021 Debenture Bonds offering 9.5% returns?
These Covered Market Linked Debentures (MLDs) are relatively new to retail investors. These debenture bonds offer 9.5% pretax returns and 8.55% post tax returns (if held for > 12 months). These debenture bonds have collateral cover of properties. The size of the issue is Rs 20 Crore and minimum investment is Rs 10 Lakhs. Small retail investors might not be able to invest due to high ticket amount. Investors should understand all these risks before investing in such high-risk investment options.
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Very rightly and in detail analyzed.
However, one must pay attention to the concentration of their debtors at 24% in Delhi NCR and 15% in Telangana – both notoriously bad for credit worthy investment option and viability and business fraud point of view.
Similarly Food processing industry accounting for 28%, Healthcare industry accounting for 16% and Light Engineering accounting for 33, total 78% of the loan portfolio in high profit-high risk business category (except Light Engineering industry which may have some residual installed assets lying at their factory premises).
Thanks for your comments Kamalji