Sundaram Alternates, a wholly owned subsidiary of Sundaram Asset Management Company Ltd (SAMC), on Thursday announced the launch of its first corporate credit fund ‘The Emerging Corporate Credit Opportunities Fund - Series I (ECCO I)’ focussed on impact, inclusion and sustainability.

A Category II Alternative Investment Funds (AIF), the Emerging Corporate Credit Opportunities Fund, will invest via high-yielding debentures and mezzanine securities of companies across MSME, SME, fintech, manufacturing and services. 

Mid-to-high teen returns

“Many companies in these sectors find it relatively cumbersome to raise capital from banks and the equity markets. The fund will try to benefit from this opportunity by being a differentiator in the marketplace through the creation of unique fund and deal structures with the backing of Sundaram Finance Group, which will aid the generation of consistent cash flows and risk-adjusted portfolio returns in the mid-to-high teens for its investors,” Sundaram Alternates said in a press release. 

“India’s corporate sector has gone through a prolonged phase of balance-sheet deleveraging and is now ready to lead the next leg of the capex cycle. The government’s focus and policy incentives towards capex have started showing on the ground. But when it comes to MSMEs, SMEs, fintechs, the space is underpenetrated by banks and therein lies the opportunity for funding,” Vijayendiran R, Chief Executive Officer, Sundaram Alternates, said in the statement.

“Buoyancy in business growth, especially in the mid and small-sized companies, naturally results in a higher demand for private credit. Providing this in an adequate and timely manner with speed and flexibility will allow us to command a premium,” he added. 

ECCO I will primarily focus on South Indian markets where Sundaram has a strong brand-recall. The fund is open for subscription to domestic and international investors.

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