A new fund for investing in small and medium-sized businesses has been developed by Vivriti Asset Management Private. It is referred to by the company as the first debt fund in India for private credit investments in asset-backed securities.
It is the first private credit investment in asset-backed securities in the nation, according to Vivriti Asset Management Pvt., which is launching a new fund to invest in small and medium-sized businesses.
Vineet Sukumar, founder, and managing director of Vivriti stated in an interview that the Chennai-based company is aiming to fund $250 million for its ‘Vivriti India Retail Assets Fund’ and has already secured $106 million from International Finance Corp. and M&G Investments. He added that the fund’s duration is 10 years and that the company has 18 months to raise the remaining series fundings.
“It will be a performing private credit, which is targeting a rupee return of 11%–12% for its investors, implying a dollar return of anywhere between 7% and 8%,” said Sukumar.
As private credit activity in India increases, a debut occurs. It’s a tempting prospect because of restrictions on bank lending, like those for financing mergers and acquisitions, but excitement can also soon wane.
Bloomberg reported earlier this month, citing people familiar with the situation, that Carlyle Group Inc. was only beginning to consider entering the national market.
According to its website, Vivriti asserts that due to their limited access to financial markets, India’s medium-sized businesses have a significant unmet demand for debt finance.
Mid-sized non-bank financial institutions and microfinanciers will sell their loans to a special purpose vehicle under Vivriti’s new vehicle in the SME financing, commercial vehicle lending, two-wheeler funding, and microfinancing sectors. The SPV will raise money from Vivriti’s credit fund by issuing securities guaranteed by loan receivables.
According to Sukumar, the $250 million fund will have its headquarters in India’s GIFT city and will, at any given moment, have 40 to 50 ABS investments. The exposure to a single investment would be limited to approximately $5 million to $7 million as a result, he continued.
In order to maintain a close eye on the performance of its assets, Vivriti will also make use of its technological platform, which enables it to “slice and dice” huge data sets.
With an emphasis on providing debt finance to domestic mid-market businesses, Vivriti Asset Management was established in 2019. The most recent fund launch is the seventh in the private lending sector.
