Breaking a Six-Year Funding Deadlock
Executive Summary
This case study examines a landmark financial turnaround orchestrated by Prime Capital. The client, a long-standing family-run enterprise, had been excluded from the formal credit ecosystem for over six years due to a historical default by one of its promoters. Despite the company’s operational viability, traditional banks and Non-Banking Financial Companies (NBFCs) remained hesitant to engage. Prime Capital successfully bridged this gap, securing a strategic funding breakthrough that revitalized the company’s capital structure and growth prospects.
The Challenge
A Legacy of Financial Exclusion
The client operated as a traditional family-run business with a strong market presence and a history of operational excellence. However, the company faced a severe existential crisis rooted in a legacy issue: one of the primary promoters had a recorded default. In the stringent regulatory and risk-assessment environment of the Indian financial sector, this “red flag” led to a complete cessation of credit flow.
| Key Challenge | Impact on the Business |
|---|---|
Promoter Default History |
Immediate blacklisting by traditional banking institutions and major NBFCs. |
Six-Year Funding Gap |
Stagnated growth, inability to modernize infrastructure, and severe working capital pressure. |
Market Perception |
A “contagion effect” where the promoter’s personal credit history overshadowed the company’s business performance. |
The Prime Capital Intervention
Strategic Re-Engineering
Securing the Funding
The turning point occurred when Prime Capital presented the case to a leading mid-market NBFC. By highlighting the company’s six-year survival without external credit as a testament to its operational strength, Prime Capital reframed the “risk” as an “opportunity for high-yield structured growth.”
"The breakthrough was not just about finding a lender; it was about changing the narrative from a 'defaulting promoter' to a 'resilient business entity' that had survived the toughest of times."
Deal Highlights
- Funding Source: Leading Structured Credit NBFC.
- Tenure: Long-term debt with a moratorium period to allow for immediate operational scaling.
- Objective: Working capital infusion and debt consolidation.
The Outcome and Impact
- Operational Revitalization: The infusion of capital allowed the company to clear high-cost informal debts and invest in long-delayedtechnology upgrades.
- Restored Credibility: Securing funding from a reputable NBFC acted as a “stamp of approval,” effectively rehabilitating the company’s image in the financial markets.
- Growth Acceleration: With a stable capital structure, the company was able to bid for larger contracts that were previously out of reach due to liquidity constraints.
The Prime Capital
Advantage
This case study underscores Prime Capital’s expertise in navigating complex credit landscapes. While others saw a “default” and a “dead end,” Prime Capital saw a “viable business” and a “pathway to liquidity.” Our ability to bridge the gap between distressed credit histories and institutional capital remains our core differentiator in the financial advisory space.