More Indians are now looking at alternative instruments that have prospects of higher yields on their investments. Just last month, India saw the total number of new Demat account openings hitting a new record of 42 lakh, whereas the total number of such accounts reached 13.93 crore.
Gurugram-based Altitude Club is looking to build what it describes as “a kind of mutual fund for alternative assets”, supposed to be non-volatile investment instruments that deliver high yield and liquidity. The company is also betting on the projections that the Global Alternatives AUM will be worth $23.21 trillion by 2026, up from an estimated $13.32 trillion in 2021.
We spoke to the company founder and CEO Krishna Maggo to better understand how the platform works and what it is trying to achieve. Here are the edited excerpts.
Please help simplify what Altitude Club does.
Altitude specializes in crafting high-yield fixed-income investment products, distinguishing itself from platforms selling standard bonds and financing deals. The company’s mission stems from the realization that existing market platforms offer nearly identical financial products. To bring innovation, Altitude delved into the core of the market, creating baskets of alternative assets like mutual funds to provide stable, secure returns.
Our inaugural product, Prism, is a multi-asset securitized debt instrument, acting like a bond. Prism consolidates 12 diverse alternative assets, including farmland, real estate, NCD, OCD, invoice discounting, and inventory finance. Prism will soon be listed on the Bombay Stock Exchange, offering a competitive 18% coupon rate. Backed by brands with revenues up to over Rs 300 crore, Prism’s assets are secured by physical assets like real estate and machinery.
Altitude initially targeted HNI and Ultra HNI but is now expanding to include retail investors. Prism is set to launch for public investment soon.
Additionally, Altitude has launched Sustain X, a structured debt opportunity focusing on sustainable brands in the EV, solar, and renewable energy sector, with a Rs 20 crore issue size. Altitude aims to roll out a new Structured Debt Instrument every week.
What are the benefits of investing in alternative assets?
Post-COVID, traditional assets have proven inadequate for optimal returns, prompting a shift towards alternative investments, as highlighted in one of the recent KKR’s wealth reports. Altitude understands the limitations of public debt and equities, and hence we offer a solution through alternative assets for a diversified portfolio. Despite the Nifty index’s 12-13% average return and corporate bond rates of 8-10%, retail investors often face a 13% return cap, yielding 8-9% post-tax. Altitude addresses this gap, providing stable alpha returns with collateral-backed products. The challenge in adopting alternative assets on a larger scale due to perceived instability and security concerns is addressed by Altitude’s risk analysis and underwriting team.
While the alternative investment landscape grows, Altitude aims to redefine it by offering customized portfolios, distinct from common P2P lending products, catering to individual needs and providing alpha returns comparable to HNIs and UHNIs.
You are also planning to list your instrument on stock exchanges such as BSE and NSE. Can you please explain the idea behind the move?
We also feel that liquidity is one of the features that retail investors expect. And there is a huge scarcity of premature liquidity in typical bond segments. Therefore, we are trying to address this by dematerializing investment opportunities and listing them on the Bombay Stock Exchange or National Stock Exchange. An upcoming B2C product will function as a peer-to-peer exchange and further facilitate trading of these dematerialized securities. This initiative caters to retail investors’ motivation for liquidity, allowing them to seamlessly trade assets on stock exchanges. Our process involves structuring cash flows, underwriting, obtaining ratings, and listing on the stock exchange. We are anticipating a public launch by the last week of January 2024.
