Alternative Investment Portfolio Update – Aug 25

Key Financial Highlights for Aug 2025

• Foreign Portfolio Investor (FPI) Sell-off Hits Critical High

August saw the largest FPI equity outflows in seven months—a staggering ₹34,993 crore (~$4 billion) exited Indian equities—driven by U.S. tariffs, high market valuations, and a weaker rupee. Nearly ₹21,000 crore of this came in the first half, pushing year-to-date FPI outflows past ₹1.16 trillion.
For context, in the week ending August 29, FPIs dumped another $1.48 billion, totaling $6.5 billion in seven weeks

• U.S.–India Trade Tensions and Tariffs Escalation

The Trump administration imposed sweeping 50% tariffs on Indian exports, including a 25% “secondary tariff” specifically linked to India’s Russian oil purchases. This abrupt move deepened diplomatic strains and raised concerns over exports, investment, and investor sentiment.

• Manufacturing Expansion Despite External Pressures

India recorded its fastest manufacturing expansion in 17 years in August—a rare positive amid tariff headwinds

• Regulatory Initiatives to Boost Domestic Investor Participation

SEBI released a consultation paper proposing reforms to simplify the FPI framework and promote greater domestic (resident Indian) participation in global markets

• Economic Stabilization Post High Base

India’s GDP grew 6.5% in FY2025, with a notable 7.4% expansion in Q4 offsetting a slower start to the year—signaling a stabilization rather than a slowdown

• India’s GST 2.0 Reform: Simplified Structure & Targeted Cuts

The GST Council, in its 56th meeting held in early September, approved a sweeping overhaul of India’s GST system—streamlining the structure into a simpler two-tier system:

5% for essential goods and services

18% for most other items

A new 40% “de-merit” slab for luxury and sin goods (e.g., tobacco, aerated drinks, high-end cars) .These changes will come into effect from 22 September 2025—just ahead of Diwali

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Alternative Investments, Defaults, and Delays

We have created a table to make it easy for everyone to track the latest status of ongoing delays and delays on various platforms and the current updates around them.

Currently, below are the key new updates on the various delays across Alternative Investment platforms.

• Grip LoanX Delay Update
• Grip BigSpoon Recovery
• Growpital Update

LoanX – Up Money Mar’26: Payment Delay Update

What Happened

• Until July 2025, all payouts (interest + principal) were made on time, leading to 29.6% capital returned.

• On 28 August 2025, Up Money failed to deposit collections into the Trust account despite reporting ~100% collection efficiency on underlying loans.

• This breach of RBI securitization guidelines has delayed the scheduled interest and principal payouts.

• Up Money also defaulted/delayed repayments to multiple other lenders (₹474 crore outstanding across ~50 institutions like Tata Capital, Shriram Finance, SBI, Bajaj Finance, SIDBI, etc.).

Current Situation

• Promoters Ajit Singh Chawla and Sumel Singh Chawla cited operational and liquidity issues.

• Up Money recently raised ~₹20 crore from SIDBI, MAS Financial, and Klay Finvest but still failed to meet commitments.

• A cash collateral (₹94 lakh) is available with Capital Small Finance Bank, lien-marked to the Trust. If released, it could cover the remaining 8 interest payouts until Mar’26 (~6% capital recovery).

Actions Being Taken

• Team stationed at Up Money’s Ludhiana office to probe the situation.

• Coordination with Trustee (Catalyst), CRISIL, and legal counsel to:

  • Appoint a backup servicer to manage collections.

  • Invoke remedies under the securitization transaction documents.

  • Draft a legal action plan for breach of responsibilities.

What’s Next

• Detailed recovery plan expected by 15 September 2025.

• Trustee may initiate stronger enforcement if clarity from the promoters is not provided.

My View

This case highlights that even A-rated issuers (CRISIL A-) can face liquidity stress, and timely payouts are never guaranteed. The presence of cash collateral offers some cushion, but investor outcomes will hinge on how quickly enforcement and recovery measures can be activated.

Grip has been really proactive in taking actions and communicating transparently!

Recovery Update: Grip – Big Spoon Default Case

One of the long-standing default cases in my portfolio—Big Spoon (via Grip Invest, deal code BIG221001)—finally saw some closure this month.

Background

• Big Spoon defaulted back in September 2023 on part of its lease rental obligations.

• Over the past two years, Grip pursued multiple recovery avenues:

  • Monetization of leased assets

  • Civil recovery proceedings

  • Legal action against the company, promoters, and non-cooperative kitchen owners

Recovery Progress

As of 4 September 2025, an additional payout was made to investors. The full recovery status is shown below:

Key Takeaways for Investors

• Nearly half the capital has been recovered, which is a meaningful outcome given the promoters have left the country and no significant assets remain.

• Recoveries in distressed cases are usually slow, uncertain, and partial, highlighting why diversification is critical in alternative assets.

• Grip has announced that further recovery is unlikely, and investor updates on this deal will be paused unless there’s a breakthrough.

My View

While this has been a frustratingly long process, I appreciate Grip’s persistence in legal and enforcement actions, which at least salvaged ~50% of the investment. This episode is a reminder that credit risk in high-yield products is real, and platform selection + diversification are non-negotiable.

Growpital Update

• Sammunati
• Spandana Spoorthy
• Moneyboxx
• Trucap
• Finkurve
• Criss Financials – Early Repayment Done
• Dvara KGF
• Lendingkart
• Satin
• Defaults – Trucap

TruCap Finance Default: What’s Next for Investors (August 2025)

What Happened

• On 18 July 2025, CareEdge Ratings downgraded approximately ₹150 crore worth of TruCap Finance NCDs to D (default), alongside another ₹750 crore of long-term bank facilities due to non-payment of principal and interest on non-convertible debentures (NCDs) due that day.mint

• These NCDs were largely distributed via online bond platforms like Golden Pi, Grip Invest, Alitifi (Northern Arc), and BondsIndia. Investors were lured by attractive 13–13.5% yields, rated around BBB, but the defaults have starkly highlighted the risks underlying such high-return instruments.mintReddit

Immediate Fallout & Recoveries

• The default affected around 1,100 retail investors, with outstanding principal of roughly ₹55 crore.

• TruCap initiated partial repayments—about 15% was paid between 18 and 21 July

Underlying Causes

• TruCap struggled with escalating debt and asset-quality deterioration. FY2025 saw a net loss of ₹66.6 crore vs. a profit of ₹11.7 crore in FY2024, largely due to loan defaults—credit costs surged from ₹4.1 crore to ₹72.8 crore. NPA levels climbed sharply.

• Liquidity was severely stressed: as of May 31, 2025, TruCap had ₹103 crore in debt due over the next three months but only ₹57 crore in cash. It was counting on ₹92 crore in collections and pledges from promoters (₹10 crore) and the Marwadi Chandrana Group (₹100 crore, with ₹50 crore expected by mid-June). These funds did not materialize, prompting the defaults.

Broader Implications

• A meeting of the debenture holders was convened on 8 August 2025 to chart the way forward

Summary Table

Alternative Investment Funds and PMS

In our endeavor to enhance knowledge about Alternative Investment Funds and PMS  in India, we covered sessions with experts on various funds. We recently arranged a webinar with the experts as well.

Popular AIF in various categories for August

• High Yield Debt (20-25)% – Neo Special Credit Opportunity Fund
• Real Estate Funds for CRE (18-21%) – ICICI CRE Fund
• Absolute Return Funds (14-15%)- Nuvama and Tata Capital Absolute Fund

You can register below to get access to the webinar and details about the product

AIF Information

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PMS Performance August

Below is the snapshot of top top-performing PMS in India for August. Fill out the form below to download the latest information available on the funds below.

PMS Information

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Short-Term Investments

PolicyExchange is finally back with new High Yield Deals. We will be sharing the deals on a daily basis in our groups. The good part is that using PolicyExchange, you can get a 12% tax-free investment in a portfolio of Government bonds through policy assignment!

I will be participating in some of these opportunities. Read about policyexchange in our blog post

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