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Sundaram Alternates has launched its first corporate credit fund, Emerging Corporate Credit Opportunities Fund – Series I (ECCO I), aiming to focus on impact, inclusion and sustainability.
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, Sundaram Alternates said. 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.
“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. 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,” Vijayendiran R, chief executive officer, Sundaram Alternates said.
ECCO I will primarily focus on south Indian markets where Sundaram has a good 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, according to the press release.
Talking about the launch, Sunil Subramaniam, managing director, Sundaram Asset Management Company said, “There has been a 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.”
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