The Avendus Structured Credit Fund III (ASCF III) is a recent financial initiative that has reached a milestone as it was able to raise investor commitments amounting to ₹2,200 crore. This is indicative of an increasing interest and confidence in the privatized credit policies of the firm that focus on delivering industry-specific capital solutions to different economic sectors.

The fund is an extension of the efforts of Avendus to scale the proven investment strategies based on the footprint that its predecessors have established in the large-yield private credit area.

Strategic vision and fund aim

The achievements of the fundraising event can be witnessed as a demonstration of strong confidence among current and new investors, such as domestic high-net-worth individuals and family offices. This strong reception from the investor fraternity highlights the success that Avendus has had in terms of providing stable results over the years of operation in the performing credit segment.

This level of commitment in a relatively short time has helped the fund to raise capital even in a dynamic market environment, and this has solidified its status as a leading participant in the private credit environment.

ASCF III is registered as a category II Alternative Investment Fund by the Securities and Exchange Board of India (SEBI). The fund is oriented to mature and growth-stage businesses with strong and differentiated business models.

The fund will increase the value of such businesses significantly by offering personalized credit solutions. Its main investment vehicle is the provision of secure debt investments in operating and holding companies, and the freedom to selectively expose itself to hybrid investments where it perceives it necessary to do so in the transactions in the specific situations.

The fund is sector-agnostic in its operation, which gives it the freedom to pursue opportunities in a vast number of industries. It will capitalize on the strong corporate contacts and industry know-how that the Avendus Group has acquired in certain high-growth areas.

They are pharmaceuticals, healthcare, manufacturing, chemicals, technology, consumer goods, and B2B services. ASCF III aims to find high-quality investment opportunities with attractive risk-adjusted returns by concentrating on what the group can access as proprietary and has specialized knowledge.

Launch and rise of ASCF III

The emergence of funds such as ASCF III is an effort to respond to the dynamism in the private credit space of India. Mid-to-large companies and entrepreneurs are increasingly seeking custom capital solutions, which are frequently hard to find with traditional lenders.

Conventional lending institutions are often limited to conventionalized methods and strict credit models, which can fail to meet the dynamic requirements of expanding companies. Fluctuations in other sources of capital in the market have caused many promoters to explore more viable and sound sources of capital to expand their interests.

Avendus has oriented itself to fill this financing gap by providing flexible capital, which helps in advancing the strategic objectives of Indian businesses. The private credit platform of the firm has a lengthy history of execution, having done more than 100 deals and transactions with large sums over the last couple of years. This rich experience enables the team to move through different market cycles and deliver the stability and experience needed to handle a high-yield credit portfolio effectively.

The success of the previous funds in the series supports the launch and later success of ASCF III. ASCF I, launched in October 2017, finished its cycle by paying all capital back to investors by June 2022 and with a gross portfolio internal rate of return (IRR) of 18%.

ASCF II, which was introduced at the beginning of 2022, has been fully deployed and is still monitoring high performance expectations. The current fund uses these past successes as a guide in developing a diversified portfolio of 12 to 18 investments.

The fund generally aims at buying tickets valued between ₹200 crore and ₹500 crore per transaction. Through a strict underwriting policy and proactive risk management, the fund will deliver gross fund IRRs of between 16% and 18%. The aim of this interest in large deal sizes and the high-growth approach is to provide investors with a refined channel of capital growth without losing sight of capital conservation.

Conclusion

The acquisition of ₹2,200 crore commitments to the Avendus Structured Credit Fund III is a positive step forward for the company and the entire Indian private credit market. It points to the change in the financial ecosystem where alternative investment funds are becoming increasingly an attractive option to investors seeking yield and companies seeking growth capital.

ASCF III has a solid strategy, an established history of performance, and a group of professionals with experience in working in the Indian corporate environment to take advantage of the opportunities available. As the fund enters into the deployment stage, it is determined to provide positive results and help the companies it invests in to grow.