Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ) and India’s Piramal Asset Management Pvt. Ltd have jointly floated a private credit financing platform with a corpus of $300 million (about Rs 2,136 crore).
CDPQ will contribute 75% of the funds for the platform while the alternative investment arm of Piramal Enterprises Ltd will put in the remaining capital, the two companies said in a statement on Thursday.
The announcement comes less than two months after VCCircle reported that the Ajay Piramal-led Piramal Group was set to form a partnership with a Canadian investment firm for a fund that would invest between Rs 100 crore and Rs 300 crore in debt instruments of companies in sectors other than real estate.
The two companies also said that the platform will look to offer private credit to Indian companies across various sectors, including manufacturing, consumer, industrial, pharmaceuticals and logistics.
Piramal Enterprises said the partnership was in sync with its direct lending strategy for mid-market companies and major corporations. “This platform aims to leverage the significant market opportunity for alternative pools of capital to provide valuable solutions in the private credit space,” group chairman Ajay Piramal said.
Anita M George, CDPQ’s vice-president and head of strategic partnerships for growth markets, said Piramal Enterprises was a good fit for the platform because of its market position and knowledge of India’s industrial and financial sectors.
The new platform also comes on the heels of CDPQ agreeing to invest as much as $270 million (around Rs 1,750 crore) in Piramal Enterprises last year. In 2018, the investor had committed around $175 million.
Piramal Group also maintains a steady partnership with CDPQ’s compatriot, Canada Pension Plan Investment Board (CPPIB). In May last year, Piramal and CPPIB signed an initial pact to co-sponsor a renewable energy-focussed infrastructure investment trust with a corpus of $600 million.
In 2014, Piramal and CPPIB had formed a $500 million joint venture to make debt investments in residential projects. That venture likely didn’t make any headway. In 2017, however, Piramal Enterprises teamed up with CDPQ unit Ivanhoé Cambridge to provide equity capital to residential property developers.
Rise of private credit
Opportunities for private credit-focussed funds and institutions in India have increased in the past couple of years, especially in the context of banks tackling a bad-loan crisis and non-banking lenders facing a liquidity crunch. In a conversation with VCCircle at the FinServ Summit 2019, Anicut Capital managing partner IAS Balamurugan said the asset class represented a good diversification strategy for Limited Partners.
Global private equity firms Bain Capital, Carlyle and KKR as well as Indian financial services firms UTI Capital and Edelweiss all dabble in the private credit market. Bain Capital, for instance, closed a $6 billion Asia credit fund in 2018. UTI Capital, which raised Rs 1,000 crore for its maiden credit fund, is preparing for its second fund.
More recently, VCCircle reported last month that Baring Private Equity Asia’s India-focused credit platform was preparing to hit the road to raise its third fund. Avendus Finance Pvt. Ltd, the non-bank lending arm of KKR-owned investment banking firm Avendus Capital Pvt. Ltd, is also preparing to launch its second structured credit fund.