Friday, 18th October 2024: Sundaram Alternates, a trusted name in alternative investments and a wholly owned subsidiary of Sundaram Asset Management Company Limited and Sundaram Finance Limited, announces the launch of Performing Credit Opportunities Fund (PCOF) - Series I, a Close Ended Category II AIF.

India's alternate credit market is currently valued at approximately USD 80 billion, with the private/non-bank credit segment estimated to be between USD 10-23 billion annually, growing at a robust 10-15% CAGR. There is a unique and significant opportunity for private credit funds like PCOF-Series I.

The primary objective of PCOF is to invest in high-yielding debentures (both listed and unlisted) and mezzanine securities targeting MSME, SME, Fintech, Manufacturing, and Services sectors. The fund aims to provide investors with attractive risk-adjusted returns through a diversified, cash-flow backed, and growth-oriented investment strategy.

The investment objective of the Fund is to invest in high yielding debentures in addition to mezzanine securities primarily to mid-market companies in India with sales / revenues between INR 250 - 5000 crores. Such companies ought to be strong going concerns and investments of the fund will be backed by a combination of strong business cash flows, hard assets, guarantees, share pledges and other security structures, as may be applicable.

A hallmark of the PCOF is its skin in the game commitment from sponsors, who will contribute up to 15% of the fund size. The fund will distribute quarterly income to investors, providing a steady cash flow. The fund will recycle principal repayments during the investment period to enhance returns for investors, with the goal of commencing capital distributions from Year 4.

Karthik Athreya, Head- Fund Strategy (Private Credit) at Sundaram Alternates, stated, “We are excited to launch the PCOF-I, which builds on our successful track record in private credit investing. The Indian market is ripe for growth in this asset class. Private credit in India is at an inflection point, and we see this asset class evolving significantly, mirroring global trends. With India's favorable macroeconomic landscape, we aim to be at the forefront of driving compelling returns for our investors through our team’s deep market expertise and disciplined investment approach. We look forward to strong investor interest and attractive deployment opportunities for our strategy, which is well-positioned in this environment.”

With a demonstrated track record of 7 years, Sundaram Alternates has successfully raised INR 3,100 crores across five Category II AIFs and invested INR 3,500 crores across 65 deals, achieving zero capital losses and closing in on approximately 17% gross investor returns. This history of performance reinforces the potential of the new fund to deliver significant value to its investors.

Notes to Editor

Key Features of PCOF-Series I:

• Investment Focus: Mid-market companies in India with sales / revenues between INR 250 - 5000 crores
• Target Returns: Portfolio level ~13-16% target IRRs; investor net returns ~12-13%
• Distribution: Quarterly income distributions, amortising portfolio for ~4-4.5 years duration
• Tenor: 5 years (extendable by 2 years)
• Investment Strategy: Senior secured credit portfolio, diversified, cash-flow backed, growth-oriented, and short-medium duration
• Focus: 'Pure credit risks' for risk-adjusted returns, mid-sized investees, strong SF franchise support

About Sundaram Alternate Assets

Sundaram Alternate Assets Ltd. (SAAL), an established player in the AIF space, is a 100% subsidiary of Sundaram Asset Management Company Limited (SAMC) and Sundaram Finance Limited. Sundaram Alternates caters to the 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 brings rich experience in both Portfolio Management Services (PMS) and Alternative Investment Funds (AIF), creating wealth for investors across diverse asset 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.