Avendus eyes final close of its second structured credit fund at ₹1,000 crore

“Of the target fund size of ₹1,000 crore (including green shoe) we have received commitment for 75%-plus. We did our first close earlier this year and hit subsequent closes. We have drawn 30% of the capital and have deployed it across three deals, while looking at more deals for the investment pipeline. We are likely to close the fund within a few months.”

While it had raised the first fund entirely from HNIs, the second fund has also got commitments from institutional investors. “For this fund, several domestic institutions from insurance (life and non-life) and banking sectors are participating. We expect many more institutional investors to pick this asset class,” he added.

The Avendus Structured Credit platform has seen over 60 transactions in the last five years. The mid-to-high yield performing fund offers solutions to firms and promoters with high quality differentiated businesses, including growth financing, acquisition financing, capex financing, and bridge-to-next round of equity financing and for initial public offerings. “It expands the entire capital structure spectrum allowing customized capital for the type of investment. It is a sector-agnostic fund. However, some sectors where we have many deals include pharma and healthcare, IT services, specialty chemicals, manufacturing and B2B services. Sectors where we are not active are real estate, and infrastructure,” said Dhedhi. Avendus exited all the nine investments from its first fund, Avendus Structured Credit Fund I, at a gross internal rate of return of around 18%.

It plans to expand the structured credit business’ investment strategy to cater to a broader spectrum of demand.

“We expect to continue to build our position in the mid-to-high yield performing credit market. However, as market cycles not only become shorter but more volatile, it will be important to be nimbler to react to changing economic, market, investing environments, and at the same time be flexible to structure it as per the requirement. We expect to cover a larger spectrum of the entire private credit market (12-18% IRR) via multiple strategies and try and do larger deals,” said Dhedi.