Bluoak Global Capital: closing the gaps where regular institutions are absent
The importance of capital raising and issues related to capital always will remain significant in the industry. Large-scale enterprises often find their ways out from the financial quagmire, but it is not quite the same for the mid-scale enterprises. Hence, came the opportunities for the rise of financial services firms. With the advent of Neo-liberal economic policies in India, the financial sector especially has seen a significant rise. The role of the financial sector in value and wealth creation is now a dominant factor in the local and global economy. The Indian financial sector picked up its pace after the digital revolution made inroads in the market. In today’s time, the Indian economy is undoubtedly one of the world’s largest and fastest-growing economy. Keeping aside the previous early growth cycle, most of the current growth remains driven by MSMEs and SMEs. The current market growth estimates a huge demand for growth capital estimated over INR 42,000 Crore by 2021. The existing banking financial infrastructure remains unable to satiate more than 20% of this demand due to Structural issues, Internal constraints and lack of familiarity with this space and credit metrics that have inhibited the banking system from catering to these requirements. Investment Banker’s / Advisor’s role is somewhat congruent to that of an airline pilot. The requirement arises only when the business takes off or while facing turbulence.
The disruptions in the digital world paved way for Bluoak Global Capital (BOGC) to become operational in 2015 to deliver the certain value proposition. The founding members of BOGC had a proven success history and track record of partnering with clients throughout their life cycle and mission-critical solutions. The firm’s existing MNC platforms only had a macro level perspective of the emerging opportunities in the Indian scenario and convincing the echelons at the overseas Head offices about the attractiveness of the local opportunities was sort of Herculean task. Even after being located at such a far distance, they could astutely gauge the holistic picture of the burgeoning opportunities coming up in certain sections of the Indian market. BOGC’s team early assisted many midscale industries who are now large corporates in their process of value creation through their life cycle. The founding team took it as a latent opportunity to transmigrate their experiences and expertise in partnering with the promising SMEs which had the potential to be mentored and scaled up. Hence, the founding team conceived BOGC with an outlook to deliver the value proposition described above.
Consolidation of the market through structured Instruments
Post-nineties, the Indian market came out of an economy that was subsumed by a licensed environment. The firms which were MSEs at that period early liberalization, now are the LSEs. In order to scale and create value through acquisitions, the firm ensured capital raising by innovating methods for many significant cases. To illustrate in simpler words, for instance, one of the daunting assignments was to make an impact on the structured debt to facilitate equity infusion by one of the early cellular companies). In the initial period, liquidity and credit sensitivity in the domestic market were very much scarce. The firm’s team employed creative and innovative methods to structure a Rupee Indexed Note subscribed to by a Cargill Ventures (an Overseas Corporate body). The firm innovated Structured Instruments for another corporate seeking growth capital. These instruments were further placed over two dozen Regional Rural Banks. These experiences sensitized the firm’s understanding to provide customized solutions to stoke the respective client’s growth aspirations. It also reiterated the need to innovate and customize solutions when markets were challenging be it in terms of credit metrics or liquidity constraints.
The area of expertise
The dynamics and ecosystem for today’s SMEs are far very much different than before. Lender Universe is more broad-based both in terms of composition, and focus, and there is the abundant availability of broad-based market access instruments. when the system is awash with liquidity but some categories of borrowers have limited access to it. In spite of that, the emphasis continueThere are times s to remain on critical capital, mentoring and partnering enterprises in their process of value creation. It is in this context that BOGC provides a critical value proposition and an ecosystem in transmigrating the experience honed in over scores of deals – to today’s emerging enterprises. Time to market and time to scale still remains the contemporary critical issues along with the business lifecycles getting more concentrated and shortened. These circumstances obligate the promoters and enterprises to secure the right type of strategic inputs in terms of financial structures and requisite flexibility for value enhancement and consequent value monetization.
As far as the mobile telephony in India is concerned, the BOGC team was amongst the early bankers which further provided the template on the evolution of new businesses and markets beyond the inflection point after an initial nosedive, perceived as to be an industry collapse. Such situations generated challenges in assessing business valuations and the requirement to raise innovative offshore financing.
Bluoak’s business model focuses at two distinct and critical points of a business lifecycle. There seems to be an interesting case for some small firms constrained to raise capital even with robust business models due to the absence of providing bankable collateral in spite of solid cash flow. Hence, their task is to raise critical growth capital suitable for structured credit solutions with risk mitigated structures targeted at niche domestic and international lenders. The firm is currently involved in developing a portfolio of investors in different categories such as family offices, niche domestic investors, International Investor, and Development funds.
They also focus at the end cycle, where businesses are experiencing turbulence. Most of the clients in this space are endowed with such decent operating metrics but require a realignment of financial structure. The firm’s current mandate encompasses firms from healthcare to real estate to infrastructure. The solutions for the same are designed in collaboration with the overseas structured funding and distressed asset partners.
The firm’s broad experience sensitized them to view markets like a funnel where either the investor or issuer end is narrow.
The Road Ahead
In the recent past, BOGC partnered with specialty chemicals (Fusolve) start-up which holds a unique proposition primarily targeted to meet mission-critical requirements in the defense industry with secondary solutions targeted at Railways and Automobiles. The firm partnered with Fusolve from the concept stage all the way through building a business proposition and raising initial funding leading to an investment by a Strategic Investor while keeping with their motto of “Cradle to Cusp.” The firm plans to remain involved in the process of advising and partnering the promoter for value enhancement and value monetization. The firm also plans to partner other organizations with disruptive value propositions in the Customer Interface Management, Logistics Management, Cybersecurity, and Education to enhance business models and financial structure. The company is also in the process of setting up a fund that focusses on delivering critical financial and meeting special needs of corporates through a structured credit/mezzanine fund.