Avendus Finance, the credit solutions arm of Avendus Capital on Friday announced the launch of its category II structured credit fund. The alternative investment fund will target a corpus of Rs 250 crore and will retain any oversubscription of up to Rs 250 crore.
Investors will need to commit a minimum of Rs 1 crore into the fund, which will target the mid-market firms. The fund will invest in structured credit products of holding and operating companies yielding mid- teens returns, which may include equity upside.
The fund will invest in industrials, healthcare and consumer, but stay away from infrastructure. "The fund will co-invest with Avendus Finance. The NBFC will have a minimum 20 per cent share in every transaction,'' says Sandeep Thapliyal, managing director and CEO, Avendus Finance, who will manage the fund with colleague Nilesh Dedhi.
"With this new fund, we are confident to strengthen our footprint in the alternative investment space. Structured credit is today well acknowledged as an attractivealternate pool of capital which provides adequate flexibility to business ascompared to conventional pool of debt capital,'' says Thapliyal.
The structured debt market has gained ground in the last five years and includes players like KKR, Piramal, Edelweiss, and NBFCs. It's an alternate pool of capital available to promoters, which is considered cheaper than private equity, but expensive than bank credit.
''If you are yet to unlock the potential of your business, structured debt is moreefficient than diluting equity,'' says the head of an NBFC. Avendus, which setup the NBFC in November 2016 and made 5-6 transactions, is targeting a book of Rs1,000-1,500 crore this year.