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Sundaram Alternates, a trusted name in alternative investments and a wholly owned subsidiary of Sundaram Asset Management Company Limited and Sundaram Finance Limited, announces the launch of Performing Credit Opportunities Fund (PCOF) - Series I, a Close Ended Category II AIF.

India’s alternative credit market, currently valued at approximately USD 80 billion, presents a significant growth opportunity, with the private/non-bank credit segment contributing USD 10-23 billion annually and growing at 10-15% CAGR. In this thriving environment, private credit funds like PCOF-Series I are uniquely positioned to capitalize on the market's potential.

The primary investment objective of PCOF is to generate attractive risk-adjusted returns by targeting high-yielding debentures (both listed and unlisted) and mezzanine securities. The fund focuses on mid-market companies, particularly in the MSME, SME, Fintech, Manufacturing, and Services sectors, with revenues ranging from INR 250 to 5000 crores. The investments will be supported by a range of security structures, including strong business cash flows, hard assets, guarantees, and share pledges, ensuring a robust risk management framework.

A hallmark of the PCOF is its skin in the game commitment from sponsors, who will contribute up to 15% of the fund size, demonstrating confidence in the fund’s success. The fund will distribute quarterly income to investors, providing a steady cash flow. The fund will recycle principal repayments during the investment period to enhance returns for investors, with the goal of commencing capital distributions from Year 4.

Karthik Athreya, Head of Fund Strategy (Private Credit) at Sundaram Alternates, commented, "We are excited to launch PCOF-I, which builds on our proven track record in private credit investing. The Indian market is at a pivotal point for private credit growth, and we believe our disciplined investment approach and deep market expertise position us to deliver compelling returns for our investors. We anticipate strong interest and exciting deployment opportunities for this strategy, which is well-positioned in this environment.”

With a demonstrated track record of 7 years, Sundaram Alternates has successfully raised INR 3,100 crores across five Category II AIFs and invested INR 3,500 crores across 65 deals, achieving zero capital losses and closing in on approximately 17% gross investor returns. This history of performance reinforces the potential of the new fund to deliver significant value to its investors.

Notes to Editor

Key Features of PCOF-Series I:

·Investment Focus: Mid-market companies in India with sales / revenues between INR 250 - 5000 crores

·Target Returns: Portfolio level ~13-16% target IRRs; investor net returns ~12-13%

·Distribution: Quarterly income distributions, amortising portfolio for ~4-4.5 years duration

·Tenor: 5 years (extendable by 2 years)

·Investment Strategy: Senior secured credit portfolio, diversified, cash-flow backed, growth-oriented, and short-medium duration

·Focus: 'Pure credit risks' for risk-adjusted returns, mid-sized investees, strong SF franchise support

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