Centrum arm mops up ₹155 crore with structured credit fund

Rajesh Kurup Mumbai | Updated on October 07, 2019 Published on October 06, 2019

Centrum Alternative Investment Managers Ltd (CAIML), Centrum Group’s Alternative Investment Management arm, has marked the first close of its maiden structured credit fund at ₹155 crore.

The fund — Centrum Credit Opportunities Fund (CCOF) — is a ₹500-crore fund with a ₹250-crore greenshoe option, which will invest in companies in the core economy space, core manufacturing and brick ‘n mortar firms.

“This is basically a credit fund and our focus here is to lend to corporates and promoters and other private companies. There is a generally a slowdown in the traditional sources of capital, banks and NBFCs, and this is the right time for companies in the alternative credit space to provide funding,” Rakshat Kapoor, Fund Manager, and Chief Investment Officer at CCOF, told BusinessLine.

“We focus on industrial companies, hospitality firms, building products companies and chemicals and speciality chemical companies, among others,” he added.

The fund will not invest in real estate, and sectors with heavy leverage such as the telecom sector and sectors with a high degree of governmental interference.

Following the first close, CCOF will raise the remaining funds in tranches in the next 2-3 quarters. The majority of investors in the fund are family offices and Ultra High Networth Individuals, who are savvy investors.

The fund has also made its first investment of ₹30 crore in a speciality chemical manufacturer. The firm will use the funds towards long-term working capital, capital expenditure and payment of debt.

Recently, CAIML also entered into agreements to provide ₹155 crore debt to a financial services company and another ₹150 crore to a water infrastructure company. The names of the companies were not disclosed.

“Given the recent volatility in credit markets, and with banks and NBFC’s continuing to reduce risk exposures, we see significant value and opportunity in performing credits space. With this fund, the team can continue their proven investment strategy that aims to deliver attractive risk adjusted returns for our investors,” Kapoor said.

“The fund has an active deal pipeline in place and focuses on providing private credit solutions to companies with scalable business models and ability to generate regular cash flows,” he added.

The fund has 4-year tenure with an option to extend for two years and aims to generate an internal rate of return of 16-18 per cent.

Published on October 06, 2019