[Exclusive Interview] This Investment Marketplace Is Enabling Fixed Income Opportunities For Investors

Recently, we interacted with Soumya Kushwaha, Co-founder, Leaf Round – a marketplace for exclusive, high-yield, fixed-income opportunities.

Here are the interview highlights:

What exactly is asset leasing?

Asset leasing involves the renting of movable or immovable assets for a specified period. It is an agreement between a lender, known as the lessor, and a borrower, known as the lessee. The lessor, typically an individual or a company, leases the asset to the lessee for a specific period and at a predetermined cost. In return, the lessee is granted exclusive use of the asset and makes periodic payments throughout the lease term.

Advantages of Asset Leasing:
Diversification and Higher Returns: Asset leasing offers potentially higher returns than traditional investments like fixed deposits. It allows investors to diversify their portfolios with non-market linked investments, reducing risk and increasing the potential for greater returns.

Lower Investment Risk: Compared to equity and other alternative investments, asset leasing presents a lower investment risk. With leasing, investors can benefit from reduced risks and increased liquidity, making it an attractive option for risk-averse individuals.

Access to Non-Market Linked Investments: Asset leasing provides investors with access to investments that may not be available through conventional means. This allows for diversification across different asset classes and industries, enhancing portfolio stability and growth potential.

Flexibility and Tailored Investments: Asset leasing offers flexibility as investments can be tailored to suit individual investor needs. This adaptability allows investors to align their investments with specific goals and preferences.

Asset leasing is a type of contract in which the lessor, who is the owner or provider of the asset, allows the lessee, who is the person or business using the asset, the right to use the asset for a predetermined period in exchange for recurrent lease payments.Without having to fully own the assets, organizations and individuals can access and use them through asset leasing, which offers flexibility, cost-effectiveness, and significant tax advantages.

Leasing also aids in better cash flow management. Businesses may successfully budget and manage their cash flow with predictable monthly payments over a set period of time. This steadiness allows individuals to avoid the financial stress of significant one-time expenditures, allowing for better financial planning and stability. Leasing is frequently related with tax advantages. Lease payments are considered operational expenses in many jurisdictions and may be tax deductible. This minimizes a company’s overall tax liability. Furthermore, leasing eliminates the requirement for depreciation calculations and simplifies the financial reporting procedure, streamlining processes even further.

Businesses can increase their working capital by preserving capital through leasing. Working cash is essential for covering day-to-day operational expenses, inventory management, and satisfying short-term financial obligations.

How do your alternative investment techniques mitigate risk ?

Leaf Round employs various techniques to mitigate the risks associated with alternative investments. To address asset risk, the company transfers the responsibility of asset care and maintenance to the lessee through licensing contracts. In the event of asset damage, theft, or redundancy, the liability rests with the lessee rather than the investor. Leaf Round’s due diligence team conducts thorough risk analysis and assessment of companies before new deals are listed, aiming to reduce default risk. However, in case of a default, Leaf Round acts on behalf of investors and repossesses the assets from the lessee. These assets are then sold through their partners, to obtain the best possible price. While these partners charge a fee, the investor receives the net amount after deducting the fee. Leaf Round claims to have not liquidated any assets to date. To mitigate payment risk, Leaf Round sets up eNACH mandates in advance, ensuring that 100% of the repayment amounts are secured for timely and hassle-free repayments. Additionally, they collect date-less security checks from the company equivalent to 100% of the repayment amount. Through these risk mitigation strategies, Leaf Round aims to provide investors with a sense of protection and minimize risks related to asset damage, default, and payment delays.

What kind of products does Leaf Round offer?

Leaf Round is described as a marketplace for exclusive, high-yield, fixed-income opportunities. They aim to provide investment options with high risk-adjusted returns that are thoroughly vetted by their in-house risk experts. The platform offers high-yield, fixed income options to help investors diversify their portfolios efficiently.

One of the key features mentioned is fixed returns, which means that investors can expect regular cash flows that are credited directly to their bank accounts on time. Leaf Round also emphasizes the goal of democratizing exclusive investment opportunities. They provide access to opportunities in various alternative assets, ranging from short-term (30 days) to medium-term (24 months) tenures..

Leaf Round offers two primary products: Asset Leasing and Invoice Discounting. Here are the details for each:Asset Leasing:

• Description: Investors can earn monthly rental income by purchasing assets and leasing them to verified companies.
• Minimum Investment: ₹20,000.
• Tenure: 12-30 months.
• Internal Rate of Return (IRR): 18-24%.

Invoice Discounting:

• Description: Investors have the opportunity to invest in verified invoices from credible companies and earn one-time fixed payouts.
• Minimum Investment: ₹50,000.
• Tenure: 30-90 days.
• Internal Rate of Return (IRR): 11-13%)

What is your future plan for expansion?

On-boarding 100000 Investors onto Leaf Round by End of Year

– Launching iOS App and strengthening Android and Web Interfaces

– Building a world class compliant and secure infrastructure for on-boarding multiple fixed income opportunities

– Streamlining and simplifying the process of discovery, purchase and tracking of fixed income opportunities

What factors ought investors to take into account when assessing different investment opportunities?

When evaluating different investment opportunities, there are several crucial factors that investors should take into account. First and foremost is understanding their own risk tolerance, which involves determining how much risk they are comfortable taking and aligning their investment decisions accordingly. It is also important to clearly define investment objectives, such as long-term growth, income generation, or capital preservation. Additionally, considering the time horizon for the investment is crucial in selecting appropriate investment vehicles and strategies.

Diversification is another key aspect to consider, as spreading investments across different asset classes and within each class helps manage risk effectively. It is essential to be aware of current market and economic factors, such as interest rates, inflation rates, and geopolitical developments, as they can have a significant impact on investment outcomes. Evaluating the historical performance of an investment and its future prospects is important, along with understanding any charges, fees, and associated costs.

Investors should also be mindful of regulatory and legal factors related to the investment, including any tax implications. Considering tax considerations, liquidity (the ease of converting the investment into cash), and any lock-in periods that restrict the ability to withdraw or sell the investment are also important factors to assess.

While this list covers important aspects to consider, it is not exhaustive, and there may be additional factors relevant to specific investment opportunities or individual circumstances. Seeking guidance from financial advisors or professionals can provide tailored insights and assist investors in making well-informed decisions aligned with their investment goals.

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