Avendus Floats INR 4,000 Cr Private Credit Fund III

SUMMARY

The new category-II AIF, which also has a green show option of INR 2,000 Cr, will target 12-18 transactions

Avendus said that the fund will target sectors such as manufacturing, consumer, chemicals, technology, B2B businesses, pharmaceuticals, healthcare, among others

With an eye on mature and growth-oriented companies with strong business models, the new fund will dish out cheques in the range of INR 200 Cr to 500 Cr each

Homegrown financial services firm Avendus on Thursday (January 9) announced the launch of its third private credit fund with a target corpus of up to INR 4,000 Cr.

Floated by the company’s asset management arm Avendus PE Investment Advisors, the new category-II alternative investment fund (AIF) will also have a green show option of INR 2,000 Cr.

“ASCF–III (Avendus Structured Credit Fund III) will primarily invest in secured credit transactions of both operating companies and holding companies, with select investments in hybrid structures based on specific deal requirements,” said the company in a statement.

Avendus said that the fund will target sectors such as manufacturing, consumer, chemicals, technology, B2B businesses, pharmaceuticals, healthcare, among others. In a statement, the financial services company said that the fund will target mature and growth-oriented companies with strong business models.

Overall, the fund will aim to undertake 12 to 18 transactions with a target gross portfolio internal rate of return (IRR) of 16% to 18%. The private credit fund plans to dish out cheques between INR 200 Cr to 500 Cr for each transaction.

“We are deeply committed to growing our asset management business. This platform is built leveraging the core strength of the franchise i.e. deep sector expertise and extensive corporate relationships, with a focus on identifying large high growth strategies,” said Avendus cofounder Kaushal Aggarwal.

Meanwhile, executive director of Avendus Structured Credit Funds Anshul Jain said that the latest fund aims to capitalise on the growing demand for private credit from both investors and companies. It plans to leverage Avendus Group’s proprietary underwriting and risk management approaches to deliver strong returns.

It is pertinent to note that Avendus Structured Credit Fund I was launched in 2017 and was fully deployed across nine transactions. The company claims to have returned the “full” Fund I capital back to its limited partners (LPs) in June 2022 with a gross portfolio IRR of 18%.

Meanwhile, Avendus said that ASCF–II, which was launched in January 2022, has been fully deployed across 14 transactions and is clocking a projected gross portfolio IRR of nearly 17%.

The latest fund comes nearly a year after Avendus launched its late-stage ‘Future Leaders Fund (FLF) III’ in May 2024 with a total corpus of $350 Mn, which also had a green shoe option of up to INR 1,500 Cr.

The development comes at a time when the Indian startup ecosystem is witnessing green shoots of revival on the funding front. Homegrown new age tech ventures raised more than $12 Bn in funding in 2024, up over 20% from the $10 Bn raised in 2023.

The resurgence in funding came on the back of a healthy growth in late-stage deals. Last year, late-stage startups raised $7 Bn through 150 deals, up 25% YoY from $5.6 Bn in the preceding year. As funding winter abates, investors have been actively deploying dry powder to notch a bigger pie of the Indian startup landscape.