Trifecta makes first close of maiden venture debt fund
VCCircle_Rahul_Khanna | Photo Credit: Trifecta Capital Advisors LLP

Delhi-based venture debt firm Trifecta Capital Advisors LLP has made first close of its maiden fund at around Rs 200 crore (approximately $30 million), six months after the firm had said it has got commitment worth that much while scaling up the fund size again, it said in a statement.

Trifecta is now chasing to raise Rs 500 crore ($75 million) under Trifecta Venture Debt Fund I and made a first close on September 10.

The fund, which has been registered as category II AIF (normally associated with private equity firms) under SEBI's new norms, received approval from the markets regulator in April this year.

The firm expects to raise the target corpus in six-nine months and also hopes to announce its first investment shortly and several others in the coming months, the company said.

Trifecta had initially sought to raise Rs 300 crore and later raised this to Rs 400 crore as it brought IPO-bound RBL Bank (Ratnakar Bank) as an anchor investor with Rs 50 crore commitment.

At that time, Trifecta's co-founder Rahul Khanna, former managing director at Canaan Partners India, had told VCCircle that the firm has already got investor commitments worth Rs 200 crore and intends to make a first close in two months at 60 per cent of the target corpus that was around Rs 240 crore then.

In a response to a query on the rationale behind increasing the fund size, Khanna said: "There were two reasons. First, initially it was not clear. But budget proposals in February and other changes announced by the government with regards to AIF led to a positive change in the market and an increasing interest from foreign investors. Another reason was demand in the venture debt market. So when we realised we had enough scale, we decided to raise the corpus."

The mix of investors in the fund so far include domestic institutional investors like private insurance companies, corporate foundations and large family offices, and the firm hopes to add a few offshore investors too to the mix.

Over time, the Trifecta Capital platform will also offer mezzanine financing, acquisition financing, bridge financing and pre-IPO financing, it added.

Trifecta Capital is looking to make around 10-12 investments a year from the fund in the range of Rs 5 crore to Rs 25 crore, each.

"The demand for venture debt from new economy businesses in sectors like consumer internet, healthcare services, enterprise software and services is growing significantly. We have a strong pipeline of potential investee companies that are founded by high quality, first generation entrepreneurs who are already backed by the country’s leading venture capital funds,” Trifecta said.

It has a team of five professionals who are operating from its office in Gurgaon. Trifecta plans to expand the team with additions in Bengaluru and Mumbai, two of the other large startup ecosystems in the country.

KPMG helped it in fund structuring and EY (formerly Ernst & Young) in audit and tax compliance. While IL&FS is trustee, fund administrator and custodian and Axis Bank is debenture trustee, IC Legal Advocates & Solicitors provided legal advisory and Nishith Desai Associates offered transaction advisory.

While the venture debt asset class is relatively new in India, it’s a significant component of the venture capital ecosystem in the US as well as Europe.

The only other significant venture debt player in India is InnoVen Capital India, which is backed by proprietary capital from Singapore investment firm Temasek Holdings and operates as a non-banking financial company.

Temasek acquired debt financing company SVB India Finance from Silicon Valley Bank, a wholly-owned subsidiary of SVB Financial Group and renamed it early this year. The $48-million deal, announced in January this year, formally marked Temasek’s entry into venture debt business.

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