RBL Bank invests Rs 50 cr in Trifecta Capital's venture debt fund

Trifecta raises fund size target up from Rs 300 crore to Rs 400 crore

RBL Bank (formerly known as Ratnakar Bank) announced on Thursday it would be anchor investor in Trifecta Capital’s Venture Debt Fund, an alternative investment fund with a commitment of Rs 50 crore.

The move provides RBL Bank the opportunity to support the emerging venture debt market in India.

The fund will focus on providing structured debt to high-growth start-ups, that have raised Series-A or Series-B rounds of equity funding. The fund plans to deploy venture debt of Rs 125-150 crore a year.

“RBL Bank is dedicated to supporting the growth of entrepreneurship and innovation in India. Through our investment in the Trifecta Capital Venture Debt Fund, we have the ability to cater to this growing demand for specialised financing,” said Rajeev Ahuja, head (strategy) at RBL Bank.

Trifecta Capital has been founded by Rahul Khanna, former managing director, Canaan Partners; and Nilesh Kothari, former managing director of Accenture. The two jointly have 40 years of investing, lending and operating experience in institutional platforms.

“Our goal is to be the preferred provider of structured finance to the new economy in India. We are delighted to have RBL Bank, a very progressive and fast-growing financial institution, as the anchor investor in our maiden venture debt fund. We look forward to growing the venture debt market and making the most of this partnership,” said Khanna, co-founder of Trifecta Capital.

The Indian venture capital (VC) system has grown significantly in the past decade. In 2014, VC funds invested $2.1 billion, an increase of 47.7 per cent from 2013 when VC funds invested $1.4 billion, according to data compiled by VCCEdge, the financial research arm of VCCircle.com.

Venture debt can complement venture capital. “Trifecta would provide much needed debt financing to some of our portfolio companies,” said Pradeep Tagare, investment director at Intel Capital India.
 

Trifecta Venture Debt Fund will invest in secured debt instruments with attached equity warrants of high-growth companies backed by leading VC funds and provide domestic investors a unique opportunity to co-invest with the best. The fund will have a low-risk profile by leveraging its proprietary risk management framework and portfolio diversification strategy. Distributions will be made quarterly, providing investors with early and more predictable returns. 

While the Venture Debt asset class is relatively new in India; it’s a significant component of the venture capital ecosystem in the US as well as Europe, comprising 10-15 per cent of all venture capital deployed on an annual basis. 

“Venture Debt has a risk reward profile that is favoured by investors like pension funds, endowments and insurance companies and now Indian investors also have this opportunity available,” said Arvind Mathur, president, Indian Venture Capital Association.