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Sundaram Alternates, a wholly-owned subsidiary of Sundaram Asset Management Company and Sundaram Finance, launched the Performing Credit Opportunities Fund (PCOF) – Series I. 

The close-ended category II AIF aims to generate attractive risk-adjusted returns by targeting high-yielding debentures (listed and unlisted) and mezzanine securities. 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, it said in a statement.

It will focus on mid-market companies, particularly in the MSME, SME, fintech, manufacturing, and services sectors, with revenues ranging from Rs 250 to 5,000 crore.

PCOF-Series I aims for portfolio-level returns of 13-16% Internal Rate of Return (IRR), offering investor net return of 12-13%. The fund will provide quarterly income distributions over 4-4.5 years.

It will follow a five-year tenure with a two-year extension option. In a statement, it said the strategy focuses on senior secured credit, emphasising diversified, cash-flow-backed investments for short to medium durations, prioritising “pure credit risks” and supporting mid-sized businesses.

India’s alternative credit market, currently valued at approximately $80 billion, presents a significant growth opportunity, with the private/non-bank credit segment contributing $10-23 billion annually and growing at 10-15% CAGR. 

“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,” said Karthik Athreya, Head of Fund Strategy (Private Credit) at Sundaram Alternates.

“We anticipate strong interest and exciting deployment opportunities for this strategy, which is well-positioned in this environment,” he added.