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Avendus raises $57.8 mn to mark first close of second structured credit fund
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Avendus PE Investment Advisors, an asset management arm of Avendus Group, has marked the first close of its second structured credit fund Avendus Structured Credit Fund II (ASCF II) by raising Rs 432 crore (around $57.85 million), the home-grown financial services company said. 

It has secured the funds primarily from family offices, high net worth individuals (HNIs), two private insurance firms and two private sector banks. "Around 40% of the investors from the first fund participated in the second fund as well," said Nilesh Dhedhi, Fund Manager, Avendus Structured Credit Fund.

In October last year, the global private equity major KKR-backed investment firm launched ASCF–II, a category 2 Alternative Investment Fund (AIF), targeting a total corpus of Rs 1,000 crore (approximately $133 million) including the green shoe option of Rs 500 crore. 

The green shoe option (also known as an over-allotment option) will be utilised and Avendus will mark the final close for the fund over the next three months, Dhedhi said, adding they have already identified around three deals, one each in the IT services, B2B and specialised manufacturing space. 

ASCF - II plans to invest in secured transactions of operating companies as well as holding companies alongside Avendus Finance, the non-banking financial company (NBFC) of Avendus.

The sector-agnostic fund will target a total of around 10-12 transactions with a ticket size of around Rs 150-200 crore (against earlier of around Rs 100 crore) to be invested over the next 1-2 years with an investment tenure of 3-5 years.

“ASCF II will deploy the capital in a differentiated credit strategy focused on providing structured credit solutions to high quality, growth-oriented companies with differentiated business models, backed by marquee sponsors….With ASCF II, Avendus’s structured credit platform will now be targeting deal size of Rs 150-250 crore. The fund is evaluating multiple deals in sectors such as IT services, B2B services, specialised manufacturing, healthcare etc,” the company said. 

The first structured credit fund ASCF-I is at the end of its life cycle. Launched in October 2017, it was fully deployed across nine transactions, and 8 out of 9 transactions have been fully exited till date. It has returned more than 115% capital cash on cash basis and is currently tracking a portfolio level gross IRR (internal rate of returns) of approximately 17.88%.

“With our first fund (ASCF I), he added, we have experienced the full life cycle and delivery of the fund over the last four years, and now with ASCF II we plan to do larger transactions with continued focus on solution-based approach. We are thankful to all our investors including existing investors who have participated in our second fund reposing their confidence in our investment strategy and track record,” Dhedhi said. 

According to him, private credit market in India has seen a huge uptick over the past 6-9 months. “This is also an indication of the attractiveness of structured credit as a separate investment category amongst investors,” Dhedhi added. 

Established in 1999, Avendus Group operates in ten cities across India, the US, the UK and Singapore.  

The Mumbai-based firm is a diversified group that provides financial services in the areas of investment banking, wealth management, credit solutions and asset management. It handles $6.25 billion assets under management (AUM) under its wealth management ($5.5 billion AUM), assets management and credit solutions (excluding loan book) business.  

Over the past five years, it has completed over 50 transactions with a total investment of over Rs 3,000 crore in the structured credit space through the NBFC and the AIF’s first fund. KKR & Co bought a controlling stake in Avendus in 2015, a move that was seen to help the domestic firm scale its services in wealth management and private equity, besides foraying into the NBFC space.

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