RBL Bank has announced that it would be the anchor investor in Ex-Canaan MD Rahul Khanna’s Trifecta Capital Venture Debt Fund, the first Alternative Investment Fund (AIF) of it’s kind in India with a commitment of INR 50 Cr. The fund will focus on providing structured debt to high-growth startups that have raised Series A or B rounds of equity funding, it plans to deploy around INR 125-150 Cr. per annum.
Structured as a Category II AIF, Trifecta Venture Debt Fund will invest in secured debt instruments with attached equity warrants of high growth companies backed by leading VC funds and provide domestic investors a unique opportunity to co-invest with the best. The Fund will have a low risk profile by leveraging Trifecta’s proprietary risk management framework and portfolio diversification strategy. Distributions will be made quarterly, providing investors with early and more predictable returns.
Trifecta Capital was founded by Rahul Khanna, previously a Managing Director at Canaan Partners and Nilesh Kothari, previously a Managing Director at Accenture. Trifecta Capital recently obtained pre-approval from the Securities and Exchange Board of India (SEBI) as a Category II AIF and proposes to start investment operations within the next few months.
“Given the unique risk-reward profile of this asset class, Trifecta Capital has been able to attract RBL Bank as well as several other reputed Institutional Investors and large Family Offices into the Fund. We continue to see significant interest in the Fund and have therefore taken our target Fund size up from Rs 300 crores to Rs 400 crores,” said Nilesh Kothari.
RBL has also created a fast track program to support early stage companies with a basket of banking services to jumpstart their operations. This includes a Green Channel for Account Setup, Payroll Services, Cash Management, Payment Gateway/Transaction Services, Customised Debit Cards and a dedicated hotline to address the 24×7 needs of these high growth companies.
While the Venture Debt asset class is relatively new in India, it’s a significant component of the venture capital ecosystem in the United States as well as Europe, comprising 10-15% of all Venture Capital deployed on an annual basis.
“Trifecta Capital has pioneered the use of an AIF structure to provide investors the opportunity to participate in the success of new economy business without the concomitant risk of being a pure equity investor. Venture Debt has a risk reward profile that is favoured by investors like Pension Funds, Endowments and Insurance Companies and now Indian investors also have this opportunity available, subject to the risk disclosures made in the PPM.” said Arvind Mathur, President of the Indian Venture Capital Association (IVCA).