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Understanding the Avendus Structured Credit Fund III
Avendus PE Investment Advisors has recently introduced the Avendus Structured Credit Fund III (ASCF-III), a bold move aimed at raising an impressive Rs 4,000 crore, including a green shoe option of Rs 2,000 crore. This fund is set to diversify its investments across sectors such as pharmaceuticals, healthcare, manufacturing, consumer goods, and technology. By focusing on secured credit for operating and holding companies, and considering select hybrid structures, Avendus is positioning itself to tackle larger deals and deliver healthy returns.
Targeting Larger Deals and Healthy Returns
Anshul Jain, executive director of Avendus Structured Credit Funds, highlights that ASCF-III will typically target deal sizes ranging from Rs 200 crore to Rs 500 crore. This strategy leverages Avendus Group’s proprietary corporate network, which promises a stronger deal flow. The fund is set to build a diversified portfolio of 12 to 18 transactions, with an ambitious target of achieving a gross portfolio internal rate of return (IRR) between 16% and 18%. Over the past 12 years, Avendus’ private credit platform has been a formidable player in India, completing deals worth over Rs 12,000 crore.
A Look Back at Avendus’ Performance
The journey of Avendus in the private credit space has been marked by notable successes. Their first private credit fund, ASCF-I, launched in 2017, delivered an 18% IRR and fully returned capital to investors by 2022. The second fund, ASCF-II, introduced in 2022, has been entirely deployed across 14 deals, with an anticipated IRR of 17%. These performances underscore Avendus’ ability to navigate multiple cycles while maintaining steady, risk-adjusted returns for investors.
Rising Popularity of Private Credit
In the broader landscape, Nilesh Dhedhi, managing director of Avendus Finance, notes that India’s mid-market enterprises are increasingly turning to private credit as a flexible financing tool. In fact, private credit transactions have surpassed $20 billion over the past three years, bridging the gap between traditional debt and equity. This trend is reflected in the growing interest in alternative financing options, which provide businesses with the flexibility they need in an ever-evolving market.
The Strategic Importance of Private Credit in India’s Economy
Private credit is gaining traction in India, and for good reason. It offers a viable alternative to traditional banking systems, providing businesses with the flexibility to tailor financing solutions to their specific needs. This is particularly important for mid-market enterprises that often struggle to secure funding through conventional means. By tapping into private credit, these businesses can access the capital they need to grow and thrive.
Avendus’ Role in Shaping the Future of Private Credit
Avendus is not just participating in the private credit space; it is helping to shape its future. By launching the Avendus Structured Credit Fund III, the company is setting a benchmark for others to follow. Their strategic approach, combined with a deep understanding of the market, positions them as a leader in this burgeoning field. As more businesses turn to private credit, Avendus is poised to play a pivotal role in driving this trend forward.
Looking Ahead: The Implications of ASCF-III
The launch of the Avendus Structured Credit Fund III is more than just a financial milestone; it is a statement of intent. By raising Rs 4,000 crore, Avendus is signaling its commitment to supporting India’s economic growth through innovative financing solutions. This move not only benefits the company but also has far-reaching implications for the broader financial landscape. As Avendus continues to push the boundaries of what’s possible in private credit, it will undoubtedly inspire others to follow suit.
In conclusion, Avendus PE Investment Advisors’ launch of the Avendus Structured Credit Fund III is a significant development in India’s financial sector. By focusing on larger deals and targeting healthy returns, the company is well-positioned to capitalize on the growing demand for private credit. As this trend continues to gain momentum, Avendus will play a critical role in shaping the future of financing in India. For more insights into the evolving financial landscape, visit Tech Scoop India.
