Location: Mumbai

Sundaram Alternates launches its first corporate credit fund focused on Impact, Inclusion and Sustainability – The Emerging Corporate Credit Opportunities Fund - Series I (“ECCO I”).

A Category II AIF, the fund will invest via high yielding debentures and mezzanine securities in a portfolio of companies across MSME, SME, Fintech, Manufacturing and Services.

Many companies in these sectors, find it relatively cumbersome to raise capital from banks and the equity markets. The fund will try to benefit from this opportunity by being a differentiator in the marketplace through the creation of unique fund and deal structures with the backing of Sundaram Finance Group, which will aid the generation of consistent cash flows and risk-adjusted portfolio returns in the mid to high teens for its investors. To facilitate this, from a governance perspective, ECCO I has already finalized its credit policy and started to evaluate interesting high-yield credit deals in the market.

Vijayendiran R, Chief Executive Officer, Sundaram Alternates said, “ECCO I, will through its focus on climate and environment-related resilience be a key step in our Sundaram Alternates journey towards promoting sustainability as a key cog in our investment philosophy. India’s corporate sector has gone through a prolonged phase of balance sheet deleveraging and is now ready to lead the next leg of capex cycle. The government’s focus and policy incentives towards capex have started showing on the ground. But when it comes to MSMEs, SMEs, FinTechs, the space is underpenetrated by banks and therein lies the opportunity for funding. Buoyancy in business growth especially in the mid-and small-sized companies naturally results in a higher demand for private credit. Providing this in an adequate and timely manner with speed and flexibility will allow us to command a premium.”

Sunil Subramaniam, Managing Director, Sundaram Mutual said, “India’s macros look favorable, and the country is set to become the fastest growing economy in the world. The Union Budget for FY22-23 has stepped up public investment by raising capital expenditure by 35.4% to INR 7.5 trillion to kickstart a “virtuous cycle of investment” and crowd in private investment. There has been continued push towards incentivizing domestic manufacturing (PLI scheme) and Infrastructure. This will create a significant demand for capital in capital goods and related sectors – a key target segment for the fund.”

Karthik Athreya, Director, Sundaram Alternates said, “India has always been a large and growing credit opportunities market where banks have historically provided most, if not all, the risk capital. Post the banking sector clean-up/ consolidation and tightening NBFC oversight from the RBI over the past 8-10 years, credit requirements of small / mid-market companies, strong promoters who need interim financing/ equity support to grow their businesses and funding gaps that banks and NBFCs cannot easily lend to, have emerged as a massive structured credit Assets class in India. The post IL&FS/ DHFL/ YES Bank/ Others situation has only made this space more attractive in terms of demand for such capital. Sundaram Alternates aims to step into this opportunity and design products that are secured and downside protected which can create returns for investors that are a meaningful delta to prevailing / declining corporate credit yields. ECCO I is expected to deliver consistent current yields and risk-adjusted returns to its investors that are likely to make it compelling for investors to allocate a part of their portfolio to this Assets class. Over time, we intend to grow this private credit Assets class into a significant business for the group and expand the AMC product suite in a smart and thoughtful manner.”

ECCO I will primarily focus on South Indian markets where Sundaram has a strong brand recall and also in sectors where Sundaram Group has solid domain knowledge by virtue of its conglomerate positioning in auto, engineering, financial services, channel and consumer financing aside of attractive opportunistic deals which can generate great outcomes for the portfolio through secured investments.

It is open for subscription to domestic and international investors. Sundaram Alternates also launched Atlas - a diversified, open-ended, multi-sector Category III AIF earlier this year.

About Sundaram Alternates

Sundaram Alternate Assets Ltd. (SA), an emerging player in the AIF space, is a 100% subsidiary of Sundaram Asset Management Company Limited (SAMC). Sundaram Alternates caters to investment needs of high net-worth individuals (HNIs) with offerings across Portfolio Management Services (PMS) and Alternative Investment Funds (AIF). SAMC is a wholly owned subsidiary of Sundaram Finance Limited, a leading non-banking finance company in India.

The fund management team at Sundaram Alternates has over three decades of experience in creating wealth for investors across Assets classes and investment strategies. Strategies are built on new-age industry practices, sound operating models, data-backed research, and transparency - to give your wealth the edge it needs.

Disclaimer: This note is produced for information purposes only and is not a complete disclosure of every material fact, and the terms and conditions. The statements contained herein may include statements of future expectations and other forward-looking statements that are based on our current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. It does not constitute a prospectus or information memorandum or an offer to buy any securities or other investments. Please read the fund documents carefully before investing. Past performance may or may not be sustained in future. AIF schemes are not guaranteed and assured income schemes. AIF investments are subject to market risks and there is no assurance or guarantee that the objective of the investments will be achieved. For more information on AIF, please write to aifops@sundaramalternates.com.

This release featured in:

1. Livemint
2. The Hindu Business Line