Why Easwaran is bullish on MSME, supply chain fin

Nithya Easwaran, MD, Multiples Alternate Asset Management, says, “will be very active in the investing front. The two-three segments which is the MSME sector, both small ticket MSME as well as supply chain finance will continue to attract us as well as affordable housing finance. In consumer financing, we are seeing a lot of chatter around both credit cards and personal loans. I believe there will be some breakout stories here. Education finance will be of interest. Asset and wealth management to affluent India as well as health insurance. All of these play to the increasing affluence of India and people paying attention to the financial products that they want to consume.”



On financial services & fintech

Nithya Easwaran: It has been a very exciting time the last few years in terms of adoption of digital in financial services. We have been looking at it with great interest. I have always considered fintechs to be a continuum. Financial services and fintechs is in a way a continuum.

I have also preferred companies which play in the centre of regulation rather than being on the fringes and then interacting with regulatory entities because if you are talking to customers and regulation agencies on the other side, you have to adopt practices which are appropriate for the role which you play. So, we look for entrepreneurs which bring a good background of financial services combined with technology.

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Why do we need these fintechs? What are they really bringing? One is great customer experience which allows more inclusion and we are able to take products which are smaller sized to the customer, bite sized, which a traditional distribution system may not allow you to take on and that is their USP.

What the banks and other financial services companies bring is good risk management practices, great balance sheets, good capital and thereby a combination of these two is the best for the customer. We have had some excellent investments. We have invested in Acko. It is an insurance company, but a tech first insurance companies and some of what they are able to do, it is difficult to do without technology.

For example, one of the most exciting things about Acko is that their first notice of loss is close to 70%, what this means is if there is an incident with your car who do you call — the dealer or the company and who you call determines the quality of experience you will have in the claims, determines the intensity of claims for the insurance company and to have industry-leading 70% plus FNOL is unheard of, it is at least 20 percentage points higher than the traditional insurance sector. Because it is an app-led digital first company, Acko was able to do that and that allows them to get great quality customers and provide a very good experience.

So, we continue to look for these plays. I think some of the places where fintechs will play a very interesting role is also in addressing affluent India with products whether it is in wealth management because we have seen the HNI India being addressed through the classical wealth management companies, but there is a whole affluent India where you will have a phygital approach.

Some of those would become very interesting and even in the classical sector, a supply chain finance company with a good dose of digital-led, technology-led innovation will allow this sector to do well.

Within the financial sector, are there any subsets which are particularly attracting a great deal of interest from PE investors, especially global PE firms and are there any potential candidates right now in your sector that you are currently in talks with to invest in?

Nithya Easwaran: We always have a pipeline which is live and kicking. At any point in time, we would at least have seven or eight companies that we are evaluating in financial services alone. So, yes, we are very much active. We are in our fourth fund now. In the last three years, 2021 to 2024, we have put out about $400 million in financial services alone and I have gone out and actually said I want to put $500 million in the next three years.

So, we will be very active in the investing front. The two-three segments which I spoke about which is the MSME sector, both the small ticket MSME as well as supply chain finance will continue to attract us, affordable housing finance we spoke about a bit.

In consumer financing, we are seeing a lot of chatter around both credit cards and personal loans. I believe there will be some breakout stories here. Education finance will be of interest. Asset and wealth management to affluent India as well as health insurance. All of these play to the increasing affluence of India and people paying attention to the financial products that they want to consume.

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