9Unicorns-backed tech-based litigation financing start-up LegalPay has launched a Special Purpose Vehicle (SPV) and healthcare-focused fund for retail investors for interim financing to mid-sized assets under bankruptcy and insolvency process.
“Investors can invest as low as Rs 10,000 to fund healthcare companies undergoing insolvency… Through fractional ownership, investors can invest starting Rs 10,000 per opportunity in asset-backed legal and debt financing asset classes,” the B2B legal fintech player said.
The minimum tenure of investment ranges from 12-18 months to up to 3-5 years.
“LegalPay democratises investments through extensive use of technology and data. We want to make the use of alternative investments mainstream for retail Indian investors like the ultra-rich does… Interim finance as an asset class has a short investment cycle and has a natural realization event,” said Kundan Shahi, Founder and CEO of LegalPay.
Interim finance is a short-term, secured lending for a period of 6-18 months granted to the debt-ridden companies undergoing corporate insolvency resolution process (CIRP).
LegalPay, which invests in commercial litigations and provides interim finance, plans to raise around 4-5 SPVs worth Rs 50 lakh each totalling around Rs 3.5 – Rs 5 crore every month focused on different sectors including real estate, manufacturing and some specifically on size-focused firms.
“This will provide an expected pre-tax IRR (internal rate of returns) of around 20-30%+, implying a post-tax IRR of 14-18% of monthly disbursements helping retail investors modernise their portfolio through the use of alternative investments in legal and debt financing. It will also help solve larger problem of distressed and assets under insolvency,” said Kashish Grover, Chief Investment Officer at LegalPay.
We already have 6-7 deals in pipeline for the next one month and a half, Grover added.
The first SPV worth Rs 30 lakh went live on Monday has already received around 48% of the commitment, he said adding that LegalPay will soon launch a pre-commit option that will go live early next week for where investors will get additional cashbacks.
Currently, LegalPay has more than 1000 retail investors for other litigation financing offerings along with high networth individuals (HNIs) and family offices.
Founded in 2019, New Delhi-based LegalPay targets mid-market companies, including MSMEs (micro, small and medium enterprises), undergoing insolvencies, requiring Rs 10 lakh to Rs 5 crore.
In October, LegalPay had offered interim finance to Bengaluru-and Ranchi-based Yashomati Hospitals Pvt Ltd under the Insolvency and Bankruptcy Code (IBC).
Quoting public estimates, Grover pointed out that roughly around 2500-3000 companies are likely to go under IBC each year, of which majority would be MSMEs which would require interim financing.
A data-driven and tech-enabled alternative-investments platform, LegalPay claims to compete with restructuring players and private equity firms such as Edelweiss, KKR, Eight Capital, which generally focus on high-ticket transactions within insolvency.
Last year in May, LegalPay secured an undisclosed sum in a seed funding round led by 9Unicorns-- the venture fund set up by incubator and accelerator Venture Catalysts.
Besides 9Unicorns, LegalPay counts early-stage investment platform LetsVenture along with angel investors Ashwini Kakkar, ex-chairperson of via.com; and Ambarish Gupta, founder of New York-based private equity fund Basis Vectors and founder of Knowlarity; among its investors.
