Alternative Investments in India: Grip Invest - A Case Study

Grip Invest, a recently established alternative investment service provider in India, presents itself as a platform offering unique investment opportunities. Specializing in offering diverse deals, Grip Invest positions itself as a conduit for investors seeking promising returns. However, our initial optimism has been dampened by a series of troubling observations that have come to light over the past few months. The following issues raise substantial red flags:

When we reached out to Grip for inputs we did not get a response from them.

1. Allocation Discrepancy in Dual Deals

A matter of concern emerged when Grip Invest, despite our trust in their commitment to equitable distribution, demonstrated an uneven allocation of funds within dual investment opportunities. Specifically, the allocation of approximately 85% to the more precarious cloud kitchen venture and a mere 15% to the electric scooter enterprise contradicted our expectations for balanced risk profiles.

2. Challenges in Account Transfers

Our confidence was further eroded during a protracted period when Grip Invest encountered difficulties in executing account transfers for interest payments. This necessitated our active pursuit of their support team to rectify the situation, adding an undue burden to the investment process.

3. Opacity and Default Risk

The most disconcerting revelation pertains to the cloud kitchen venture within their portfolio, which is presently grappling with substantial financial distress, jeopardizing its ability to fulfill payment commitments. Contrary to our understanding, the risk of default extends well beyond the initially perceived 50%, with an overwhelming majority—closer to 90%—of the invested capital now exposed to potential default as outlined in the screenshot below.

The lack of comprehensive disclosure, unclear investment terms, and evident inadequacy in due diligence on Grip Invest's part underline multiple breaches of trust.

4. Shift to Exchange-Traded Products (Leasex)

Our trepidation is exacerbated by Grip Invest's recent decision to transition from individual leasing deals to exchange-traded products under the banner of Leasex. Given their track record, concerns arise about the possibility of funneling underperforming leasing agreements into such arrangements. The regulatory oversight by SEBI in this context is perplexing, as it raises questions about the propriety of these practices.

5. Discrepancy in Projected Returns

The disparity between Grip Invest's pre-tax return claims, reaching as high as 21%, and their post-tax returns, a mere 12-13%, warrants closer examination. This discrepancy remains largely unexplained, leading us to question whether substantial fees are being levied for what appears to be a substandard execution of their responsibilities.

In light of these persistent uncertainties and the apparent lack of transparency, we are compelled to exercise prudence and caution. The array of unanswered questions coupled with the apparent inconsistencies in their operations inclines us to distance ourselves from such enterprises. It is our strong recommendation to approach companies of this nature with circumspection and prioritize due diligence before engaging in any investment activity.

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