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Sundaram Alternate Assets Ltd, a subsidiary of Sundaram Finance Limited, has announced the first close of its debut corporate credit fund at Rs 205 crore (about $25 million).

The Sundaram Emerging Corporate Credit Opportunities Fund – Series I (ECCO I) will invest via high-yielding debentures and mezzanine securities in a portfolio of companies across MSME (micro, small and medium enterprises), fintech, manufacturing, and services. 

ECCO I would focus on small and mid-market borrowers who are struggling to access capital from regular institutional lenders, the company said. This space has an estimated $4 billion to $7 billion credit demand in India.

Launched in June 2022, ECCO I is a SEBI-approved category II alternative investment fund (AIF), aiming to raise Rs 500 crore (about $61 million) with a green shoe option of the same size. Marquee family offices, corporate treasuries, as well as high-net-worth individuals have participated in the fundraise.

Within five months of its launch, the fund crossed about 40% subscription in the first close.

“Private credit in India is at an inflection point, and we see this asset class evolving significantly similar to global markets,” said Vikaas M Sachdeva, Managing Director, Sundaram Alternates, according to a statement. “We are well-positioned to capitalise on new opportunities created by the current economic environment.”

The company said the strong demand for this current income-oriented fund has been driven by a differentiated fund strategy as well as investors looking for high-yield debt products as a cushion against the current economic environment.