private credit: Investec Capital sets up its maiden credit alternative investment fund in India

private credit: Investec Capital sets up its maiden credit alternative investment fund in India

Investec Capital, the local arm of a global financial services conglomerate, is setting up its first private credit alternative investment fund in India.

The Emerging India Credit Opportunities Fund I will aim to raise up to Rs 1,000 crore.

The fund will typically target senior, secured credit investments in India-focused mid-market businesses with expertise in niche segments.

“Private credit as an asset class is comparatively still in the early stage of evolution in India and is expected to witness significant growth in the coming years similar to the growth the asset class seen in developed and other markets,” said Piyush Gupta, Head of Private Credit, Investec.

The fund just raised more than half of the targeted corpus. It mopped up Rs 530 crore from more than 200 family offices and wealthy investors. The fund is expecting to complete its second tranche soon.

“Demand for non-standard, flexible debt solutions which traditional credit providers are unable to meet, remains strong on the back of continued activity in M&A, stake consolidations and bridge financing,” Gupta said.

The key focus would be on companies with strong operating history, promoter pedigree and corporate governance track record. The fund will have a four-and-a-half-year tenor and will provide private credit solutions for various end uses including acquisition financing, stake buyouts, bridge financing, refinancing, growth capex etc. The fund will be sector agnostic, barring the real estate space.

Private credit market in India has assumed significant relevance after the 2018 credit crisis. Several wholesale non-banking finance companies had to retract from the mid-market private credit space.

To be sure, with all the infusion of liquidity and rate cuts lately, large caps are enjoying a substantial spread compression and ample liquidity. However, a significant demand/supply gap seems to continue in the mid-market private credit space.

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