Tiruvarur, a town in Tamil Nadu, is known for the famous Thyagaraja Temple. It is also the birthplace of Muthuswami Dikshitar and Syama Sastri - two of the popular trinity of Carnatic music composers of the 18th century.
Capital market investment is the last thing that one would associate withTiruvarur but a U.K.-based company looking to raise funds for a project in Pune recently realised that there is enough appetite in this town for products that offer low-risk with attractive interest rates.
Red Ribbon Asset Management Plc has managed to raise a total of Rs.1 crore from only around 8-10 people – a mix of residents of the town and and non-resident Indians (NRIs) hailing from the place. While the amount is not huge when seen in isolation, all those involved in the fund-raising activity were surprised by the response from Tiruvarur.
“Tiruvarur was a real eye-opener for us as we were able to raise the money quite comfortably through an independent financial advisor,” said Aditya Kanoria, Chief Executive Officer – India, Red Ribbon Plc.
“The investors are all people from a simple background - they liked our modular construction project,” he added.
The company raised funds through CCDs — compulsory convertible debentures — with a five-year lock-in and 15 per cent annual interest payouts. CCDs get converted into equity at the time of maturity — five years in this case.
Investor views“We believe this is a low-risk product with an attractive interest rate and so have hence invested in it,” said 50-year-old Sowmi, a part-time lecturer at A.D.M College for Women, Nagappattinam. She has invested Rs.10 lakh in the debentures.
“My husband and I have been investing in equities for the past nine years but were now looking for a safer investment option. We invested in bank fixed deposits as well but Red Ribbon offered a much higher interest rate compared to banks,” she said.
The perception about low risk attracted 24-year-old Agalya as well who invested Rs.5 lakh in the product. “We were looking for investment options with low risk and were told about this by our financial advisor. We were convinced that it is a good product and went ahead,” said Ms.Agalya who also helps her father in farming at their land at Enangudi.
Firoz Shah, an IFA at Tiruvarur for the last 10 years, managed to raise this quantum for Red Ribbon. He said that the town has a mix of NRIs and residents who have retired and have a corpus to invest.
“People here are looking for stable returns with low risk,” he said. “Apart from bank fixed deposits, public provident funds and mutual funds, they also invest a part of their money directly in equity. This product is new for them but the interest of 15 per cent, which is higher than FD returns, attracted them,” he explained.
Red Ribbon Plc is raising funds for Modulex, which is touted as India’s first full fit-out steel modular buildings company. The factory will be built across two lakh square metres in Pune.
The project will be funded by a mix of debt and equity raised from banks and investors, both institutional and individuals.
