Sundaram Alternates, a 100% subsidiary of Sundaram Assets Management Company launched Sundaram Alternative Opportunities Series – High Yield Secured Debt Fund – II in Q1FY20. The fund is currently open for subscription.
The fund is a 5-year close-ended, Category II Alternative Investment Fund (AIF). The fund’s objective is to invest in high yielding instruments of real estate developers with projects predominantly in South India. Real estate is the 3rd largest sector in terms of FDI inflows, and it is estimated that the sector will grow from USD 120 billion in 2018 to USD 1 trillion by 2030.
The fund’s target size is Rs. 500 crores. Minimum investment in this fund is Rs. 1 crore.
ICRA has assigned the highest fund management quality rating of AMC Quality 1 (AMC1).
The sponsor of the fund is Sundaram Finance. Sundaram Finance (SF) was incorporated in 1954 and currently manages Assetss of USD 10.5 billion. With a market cap of USD 2.5 billion, over 600 offices and 3,600 employees across India, the company has grown to be one of the most trusted financial services group in the country with businesses in insurance, Assets management, home finance and fund services.
Key differentiators of the fund:
- Approved projects of companies with multiple ongoing projects under construction and those generating sales
- Investments that are fully secured by underlying Assetss and cash flows, with sole and exclusive charge
- Diversified portfolio with an average ticket size around Rs. 30-50 crores per developer spread over 10 developers
- Quarterly coupons distributed to investors
- Investee company to repay the principal to the fund quarterly after 12 months of the investment
The fund’s Investment Committee (IC) comprises of senior management and seasoned professionals from the group companies: Sundaram BNP Paribas Home Finance and Sundaram Finance. The fund benefits from the track record, developer network and industry experience that the IC brings to the table. The investment team has a combined experience of over 40 years.
The first series of this fund closed in October 2018 and has invested over 80% in 9 companies at a portfolio IRR of approximately 18-19%. Till date, the fund has successfully made 5 quarterly distributions to its investors amounting to around 10% of the capital.