India: IIFL AMC plans to raise $500m for maiden structured credit fund

IIFL Investment Managers MD and CEO Karan Bhagat. Photo: Mint

IIFL Asset Management Co. Ltd, a part of the wealth management business of IIFL Group, plans to raise at least $500 million for its maiden structured credit fund, said a top company executive. The company has also hired two officials, including one from private equity firm KKR and Co. Inc., to lead the structured debt business.

While IIFL Asset is still holding internal discussions ahead of reaching out to investors, it is preparing to launch the fund in a market where corporate lending from banks is fast drying up amid a pile up of non-performing assets (NPAs) and financial frauds.

The firm has hired Pranob Gupta and Abhinav Jain to lead the structured credit business. While Gupta has previously worked with KKR India as originator for structured finance business, Jain was running his own advisory business after his stint with Capital First (erstwhile Future Capital).

“We have a seed fund, an early stage fund and a late stage pre-IPO fund. On the debt side we have a real estate mezzanine fund but now we will also be looking at structured credit and distressed debt. It can potentially be about half a billion dollars fund,” said Karan Bhagat, founder, managing director and chief executive at IIFL Investment Managers. The funds will be raised in tranches.

Bhagat said he expects the bulk of the contribution to come from domestic investors, considering it will be the company’s first structured credit fund.

The fund will focus on mezzanine funding and special situations. “The idea is to set up a combination of category II and category III alternative investment fund to look at fairly wide range of structured finance and special situations related opportunities,” Pranob Gupta, principal and head, structured credit, at IIFL Alternate Asset Advisors Ltd, said over the phone. He said with respect to special situations, initially, the fund would focus on opportunities where a company has not been admitted to National Company Law Tribunal (NCLT) for insolvency proceedings and there has been no change in the operating team.

“The focus will be on investing in turnaround opportunities at the pre-NCLT stage,” he said.

The fund is likely to consider an investment time frame of at least five years.

“The returns expectations would be around 14-18% at the client level. This will be a non-real estate fund but beyond that it will be sector agnostic,” said Gupta, adding the fund will be launched keeping in mind the current market conditions, considering sentiment has been negative due to multiple defaults by IL&FS and its group company IL&FS Transportation Networks Ltd.

On the funding opportunity in the structured credit business, Gupta said, “It (structured credit) gives excellent risk-adjusted returns and diversification across sizes, underlying risks and tenor. A lot of firms are looking for capital which the banks may not be able offer hence the demand is huge.”

Currently, IIFL Investment Managers manages ₹ 20,000 crore worth of commitments through its Alternative Investment Funds business.

In May, the firm launched IIFL India Private Equity Fund, focused on backing professional entrepreneurs. It has already raised over ₹ 1,000 crore for the fund.

For the structured credit business, Bhagat said constant interaction with small and medium enterprise will work in its favour.

“We interact with several SMEs on a regular basis through our credit business. Hence, it gets easier to find the investment opportunities for us.”

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.