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RevX Capital, a private credit fund, is launching its second fund targeting to raise Rs 750 crore, including a greenshoe option of Rs 250 crore.

The latest fund already has a pipeline of over Rs 400 crore committed across 28 companies, said Rahul Chowdhury, Managing Director of RevX Capital. It will announce the fund’s first close at Rs 250 crore on January 14, three days after receiving its SEBI approval.

The first fund, launched in 2023 by Rahul Chowdhury, has made over 50 investments over the last 18 months. The fund is sector-agnostic and focuses on the manufacturing, B2B, and agriculture sectors. It invests non-dilutive capital of Rs 2.5 to Rs 30 crore per company, with tenures ranging between 12 and 30 months. This aligns with the strategy of a micro fund with a short four-year tenure.

The firm plans to launch funds under Rs 900 crore every two years to ensure maximum yields and diversification.

“We target professionally managed Indian companies with a revenue range of Rs 50 to Rs 750 crore, who are profitable and need growth capital. Our underwriting is based on cash flow, people, transparency, and governance. Most of the capital has been deployed for working capital and capex, but we have also solved some unique use cases that require a tailor-made structure. No single investment exceeds 5% of the assets under management,” Chowdhury told YourStory.

At present, the fund has a 26-member team operating out of its two offices in Gurugram and Hyderabad. It has collectively disbursed Rs 1,858 crore across over 120 portfolio companies from the last two funds, demonstrating a robust track record of investments.

The fund’s portfolio includes companies like Mivi, Farmley, Ayekart, Alt Mobility, and Amwoodo, among others.

Earlier, Chowdhury had launched India’s first revenue-based financing fund N+1 Capital before founding the Private Credit Fund Strategies under RevX Capital. He was previously the Managing Partner at investment bank Kinow Capital and DenuoSource in the US.

Private credit boom

Private credit funds are taking steam in India, with non-banking institutions carving out a niche by financing mid-sized corporate borrowers, often overlooked by traditional lenders.

Last week, Avendus PE Investment Advisors launched its third private credit fund targeting a corpus of up to Rs 4,000 crore.

Most private credit operates as Securities and Exchange Board of India (SEBI) Category II alternative investment funds (AIFs), enabling them to attract both offshore and domestic capital. High net-worth individuals (HNIs) and family wealth offices have become the primary domestic investors on these platforms. Many HNIs are drawn to the higher risk-reward potential of private credit investments, leading them to allocate substantial capital to this asset class.

According to an EY report, over $6 billion was invested in private credit deals last year. 

While the segment has enjoyed what some describe as a “dream run,” regulatory concerns have emerged. In June 2024, the Reserve Bank of India’s (RBI) Financial Stability Report highlighted several red flags, identifying the private credit market as a systemic risk due to the interconnectedness of many non-bank lenders with the broader banking system.