Sundaram Alternates Launches Performing Credit Opportunities Fund (PCOF) – Series I, Targets Mid-Market Companies Targeting mid-market companies, the fund will focus on sectors such as MSME, SME, fintech, manufacturing, and services, particularly those with revenue ranging between INR 250 crore and INR 5,000 crore.
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Sundaram Alternates, a wholly-owned subsidiary of Sundaram Asset Management Company and Sundaram Finance, has launched its latest offering, the Performing Credit Opportunities Fund (PCOF) - Series I.
This close-ended category II Alternative Investment Fund (AIF) aims to generate attractive risk-adjusted returns by investing in high-yield debentures and mezzanine securities. The investments will be backed by strong business cash flows, hard assets, guarantees, and share pledges, ensuring robust risk management.
Targeting mid-market companies, the fund will focus on sectors such as MSME, SME, fintech, manufacturing, and services, particularly those with revenue ranging between INR 250 crore and INR 5,000 crore.
PCOF-Series I aims to deliver portfolio-level returns of 13-16% Internal Rate of Return (IRR) and offers net investor returns of 12-13%, with quarterly income distributions over a tenure of 4 to 4.5 years.
The fund follows a five-year tenure, with an option for a two-year extension. Its investment strategy prioritises senior secured credit, with a focus on diversified, cash-flow-backed investments, and short- to medium-term durations. According to Sundaram Alternates, the fund will emphasise "pure credit risks" while supporting mid-sized businesses.
India's alternative credit market, currently valued at around USD 80 billion, presents significant growth opportunities. The private and non-bank credit segment contributes USD 10-23 billion annually and is growing at a compound annual growth rate (CAGR) of 10-15%, further boosting the market's potential, the firm said in a statement.
Karthik Athreya, Head of Fund Strategy (Private Credit) at Sundaram Alternates, said, "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."
Athreya also highlighted the anticipated strong interest and deployment opportunities, noting that the strategy is well-positioned in the current market environment.
