Hedge floats NBFC arm

Kerala-based Hedge Group launched its non-banking finance company (NBFC) – Hedge Finance – on Friday. The new vertical will mainly focus on the LAS (loans against securities) model rather than the traditional gold loan business.

According to Alex K Babu, managing director of the new venture, 60 per cent of the new vertical’s loan book would be LAS, 10 per cent gold loans and the remaining through providing loans in other categories such as vehicle loans and hire purchase.

The company will open 10 exclusive outlets in Kerala shortly and the service of Hedge Finance would also be provided through the 160 offices of Hedge Equities which started four years back. Hedge Equities, the group’s flagship company, now has a client base of over 35,000.

The company is planning to have loan book position of Rs.100 crore within three months of operations. The new company will also spearhead the group’s nationwide expansion as plans are on the anvil to open branches across all the metros.

Addressing a press conference here on Friday, Babu said that instead of focusing on gold loans as practiced by a majority of NBFCs in the south, the company will primarily focus on securities, a relatively under-tapped segment.

“With LAS, Hedge Finance is looking at unleashing the potential of a growing segment in the Indian financial landscape. Advances will be provided against equities, bonds, debentures, ETFs etc,” he said.

According to Babu, there is large potential for the LAS model in the Indian finance market as securitisation and DP accounts are on the rise. “This is rather an un-tapped or under tapped segment, which we consider as our core business,” he added.

The company, however, will also provide gold loans, other types of conventional hire purchases and loans against properties, as an organic extension of the services of Hedge Commodities, another group company.

Hedge Finance will also lend against warehouse receipts. The group has roped in PR Shankaranarayanan, former executive director of Federal Bank, as the executive director of the new vertical.