Investors in BluSmart Mobility’s bonds are planning to invoke the ‘Event of Default’ provision and seek immediate repayment of their money, as the company that operates an all-electric cab service faces allegations of governance lapses.
BluSmart issued non-convertible debentures, or corporate bonds, worth more than Rs 100 crore in the last one year to new-age bond issuance platforms like Yubi, Klub and Centricity. These platforms sold the bonds to their network of clients who typically comprise wealthy individuals but also include some retail investors.
The trustee firm that holds the bonds on behalf of the investors has sought their assent to send a notice to the issuer company, seeking immediate repayment of the money. ET has seen a copy of this letter to the bond investors.
This comes in the wake of BluSmart halting its cab service and moving some of its vehicles onto Uber, a rival platform.
“There was a payment due on April 14, which happened after a delay of two days. There is another repayment due at the end of this month and there is a fear that it might get delayed or the company might default on the payments,” said an investor in BluSmart bonds.
On Saturday ET reported that around Rs 85 crore worth of NCDs are due for repayment over the next one year and there are many investors who hold these debt instruments and are awaiting their money back.
Platforms like Yubi sold these unlisted papers, due for maturity in March 2026, to their clients offering a coupon rate of around 12%. Multiple investors are now asking why some of these platforms were selling the papers as late as this February, knowing that there were whistle-blower complaints against an associate entity — Gensol Engineering, promoted by BluSmart founder Anmol Singh Jaggi.
With Sebi’s investigation revealing alleged financial irregularities at Gensol, holders of BluSmart Mobility bonds are worried about the possibility of the misuse of the funds raised from them.
Also Read: Sebi finds no manufacturing at Gensol's Pune EV plant, only 2-3 labourers
“While the term sheet and deed of hypothecation say our investment is ‘secured’ by BluSmart’s EV fleet, this security is only valid if BluSmart legally owns those vehicles. But if the vehicles were bought under another group company, that means the security backing our NCD may not be enforceable at all,” said another investor in its NCDs.
ET reviewed a copy of one of these NCDs issued which specifically mentioned that none of the funds raised through the bonds would be used to buy vehicles.
“The issue proceeds will be utilised for the purpose of working capital requirements or car lease, car deposits and charging infrastructure,” read the end use statement.
According to industry insiders, while on paper the issues were meant to fund different purposes, the absence of proper hypothecation of vehicles by BlueSmart to public sector firms like Power Finance Corporation and IREDA (Indian Renewable Energy Development Authority) have raised questions around whether these funds were also diverted for other operations.
In this case, it turned out that the vehicles were bought by Gensol, which has hypothecated them to the lenders and leased to BlueSmart.
“Some of the loan documents I have seen require a clear hypothecation of vehicles to PFC and IREDA so it's surprising that they are not there,” said the chief executive of a debt-management platform which sold some of BluSmart’s bond instruments in the past.
BluSmart issued non-convertible debentures, or corporate bonds, worth more than Rs 100 crore in the last one year to new-age bond issuance platforms like Yubi, Klub and Centricity. These platforms sold the bonds to their network of clients who typically comprise wealthy individuals but also include some retail investors.
The trustee firm that holds the bonds on behalf of the investors has sought their assent to send a notice to the issuer company, seeking immediate repayment of the money. ET has seen a copy of this letter to the bond investors.
This comes in the wake of BluSmart halting its cab service and moving some of its vehicles onto Uber, a rival platform.
“There was a payment due on April 14, which happened after a delay of two days. There is another repayment due at the end of this month and there is a fear that it might get delayed or the company might default on the payments,” said an investor in BluSmart bonds.
On Saturday ET reported that around Rs 85 crore worth of NCDs are due for repayment over the next one year and there are many investors who hold these debt instruments and are awaiting their money back.
Platforms like Yubi sold these unlisted papers, due for maturity in March 2026, to their clients offering a coupon rate of around 12%. Multiple investors are now asking why some of these platforms were selling the papers as late as this February, knowing that there were whistle-blower complaints against an associate entity — Gensol Engineering, promoted by BluSmart founder Anmol Singh Jaggi.
With Sebi’s investigation revealing alleged financial irregularities at Gensol, holders of BluSmart Mobility bonds are worried about the possibility of the misuse of the funds raised from them.
Also Read: Sebi finds no manufacturing at Gensol's Pune EV plant, only 2-3 labourers
“While the term sheet and deed of hypothecation say our investment is ‘secured’ by BluSmart’s EV fleet, this security is only valid if BluSmart legally owns those vehicles. But if the vehicles were bought under another group company, that means the security backing our NCD may not be enforceable at all,” said another investor in its NCDs.
ET reviewed a copy of one of these NCDs issued which specifically mentioned that none of the funds raised through the bonds would be used to buy vehicles.
“The issue proceeds will be utilised for the purpose of working capital requirements or car lease, car deposits and charging infrastructure,” read the end use statement.
According to industry insiders, while on paper the issues were meant to fund different purposes, the absence of proper hypothecation of vehicles by BlueSmart to public sector firms like Power Finance Corporation and IREDA (Indian Renewable Energy Development Authority) have raised questions around whether these funds were also diverted for other operations.
In this case, it turned out that the vehicles were bought by Gensol, which has hypothecated them to the lenders and leased to BlueSmart.
“Some of the loan documents I have seen require a clear hypothecation of vehicles to PFC and IREDA so it's surprising that they are not there,” said the chief executive of a debt-management platform which sold some of BluSmart’s bond instruments in the past.
- BluSmart crisis: Green mobility’s red flag is giving HNIs bond blues
- How the Jaggi brothers misled investors and lenders while being cleantech poster boys
- BluSmart cab services stay suspended in Delhi-NCR, Bengaluru, Mumbai as cofounder under Sebi lens
- Gensol promoters quit board; BluSmart begins shutting ops
- Anmol Jaggi and Ashneer Grover fund trails see overlap
- Scoop: Uber in early discussions with EV ride-hailing startup BluSmart for a possible acquisition
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