Singapore-based hedge fund manager RV Capital on Thursday said it has hit the first close of its maiden India-performing private credit fund, with a target of $48 million (Rs. 400 crores) and a green shoe option of $48 million, from a mix of domestic and offshore investors.
RV Capital has made two investments from its fund – a holding company of a large Indian conglomerate backed by a strong collateral package and de-leveraging roadmap, and a solar renewable energy solutions platform with prominent investors holding a controlling stake.
Volatility in the equity markets, coupled with a high-interest rate environment, is making it difficult for companies in India to raise capital, leading to more asset managers launching their credit funds.
Private credit activity in Asia is witnessing strong growth momentum. At least $4 billion in private credit was deployed across select transactions in H1 2023 in India, according to EY. The country saw over $5 billion of private credit investments in 2022.
Earlier this year, 360 ONE Asset Management, formerly known as IIFL Wealth & Asset Management, raised $258 million for its largest credit fund to date, exceeding its initial target of Rs 1,500 crore.
Later, Centrum Alternatives, an asset manager headquartered in Mumbai, said it was looking to launch its second private credit fund. Among others who are raising credit funds, InCred Asset Management is targeting a Rs 500-crore ($61.2 million) corpus with a greenshoe option of another Rs 500 crore. More recently, Stride Ventures announced the first close of its third venture debt fund at $100 million.
“As a global entity, we have observed a clear upward trend in the market’s appetite for alternative financing options and an increasing number of private credit deals that are more attractively priced in terms of risk-adjusted returns. This encouraged us to establish our India presence to address the demand-supply gaps that have emerged due to several structural changes in the Indian credit markets over the last few years,” RV Capital’s India head and chief investment officer Shyamal Karmakar said.
RV Capital is pursuing a sector-agnostic approach in its deals. The firm will invest from Rs 20-50 crore and more in case of co-investments or offshore participation.
The firm said it will primarily focus on investing in manufacturing, industrial, and services sectors, including holding companies and special purpose vehicles, subject to marketable collateral structure, strong visibility on exit, or backed by marquee promoter groups/investors.
The fund can also invest a part of the portfolio in price-dislocated listed bonds and high-grade bonds based on RV Capital’s high-conviction macro views, the firm said.
The fund is poised to make another close shortly and its next investment by November 2023. It is currently generating gross returns higher than its target of 14-16%.
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