Origo Commodities and Vivriti Capital launch new asset class: Securitised commodities

Origo Commodities, an agri-tech supply chain and trade finance company, has tied up with Vivriti Capital to execute a new asset class of securitised commodities in the country. It will be made available to institutional investors, introducing agri-commodities to capital markets.

The first securitised transaction has already taken place with the purchase of maize in the Gulab Bagh area of Bihar. The transaction was worth Rs 7 crore, according to a statement made by the company. It is now looking to reach Rs 100 crore in revenue for the current fiscal year.

The transaction was also listed with the Securities and Exchanges Board of India (SEBI) and regulated by Warehousing Development and Regulatory Authority (WDRA).

"With e-NWR, the commodity being financed is dematerialized and hence available in electronic format. With this structure, investors will be able to invest in agriculture commodities in a manner similar to other financial instruments, but with the added security of being backed by physical commodity," it said, referring to e-Negotiable Warehouse Receipts.

Investors can get pass-through certificates (PTCs) backed by receivables and secured with the commodity as an asset. This PTC has been rated as A1 by ICRA, which shows the low-risk nature of transactions under this asset class, according to Origo.

"This transaction, with the credit protection it provides to investors, can help establish agriculture commodities as a strong asset for debt capital markets and provide liquidity relief to several participants in the agriculture commodities ecosystem," said Adithya Murali, Vice President Structured Solutions – Enterprise Finance at Vivriti Capital in a press release.

Origo currently manages assets worth Rs 8,500 crores under its warehousing division, and operates in 12 states across India.