Avendus PE Investment Advisors, an asset management arm of the KKR-backed Avendus Group, on Thursday announced the launch of its third private credit fund with a target corpus of Rs 4,000 crore ($466 million), including a greenshoe option of Rs 2,000 crore.
Avendus Structured Credit Fund III (ASCF–III), a sector-agnostic fund focused on industries such as pharmaceuticals, healthcare, manufacturing, consumer, chemicals, technology, and B2B businesses, among others, 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.
The fund aims to build a well-diversified portfolio of 12-18 transactions with a target gross portfolio IRR of 16-18%, the firm said in a statement.
“India’s mid-market enterprises are increasingly leveraging private credit as a powerful financing solution, especially when flexibility provided by capital becomes a critical aspect,” said Nilesh Dhedhi, Managing Director, Avendus Finance.
“With private credit deals surpassing $20 billion over the past three years, this asset class is bridging a critical financing gap which existed between traditional debt and equity, making it one of the fastest-growing asset classes,” Dhedhi added.
Avendus is best known in India for advising large startups such as SoftBank-backed food delivery firm Swiggy and eyewear retailer Lenskart on their fundraising. Its portfolio includes Bikaji Foods, Delhivery, VerSe Innovation (Dailyhunt), Veritas Finance, FirstCry, Avanse Financial Services, and Xpressbees.
Avendus’s first fund, which was launched in October 2017, was fully deployed across nine transactions and returned the full capital in June 2022, achieving a gross portfolio IRR of 18%. The second fund, which launched in January 2022, is fully deployed across 14 transactions, tracking an expected gross portfolio IRR of 17%, Avendus said in a statement.
At least four of its portfolio companies – FirstCry, Avanse, Veritas Finance and Indigene – have disclosed plans to go public.
“With ASCF-III, we plan to focus on larger deals and businesses with typical deal sizes between Rs 200-500 crore, along with leveraging Avendus Group’s strength of having proprietary access to corporates for origination,” Anshul Jain, Executive Director, Avendus Structured Credit Funds, said.
Avendus Group has a presence in investment banking, institutional equities, wealth management, credit solutions, and asset management. KKR had acquired a majority stake in Avendus Group in 2015.
In September, The Economic Times reported that Nomura, Japan’s largest investment bank and broking firm, has jumped into the race to acquire Avendus.
Nomura was initially the sell-side banker for the Avendus transaction but with the firm joining the fray as a potential suitor, the Japanese bank has relinquished the mandate, the report said.
The Avendus sale process has already seen keen interest from Japanese financial conglomerate Mizuho, perceived as the most aggressive contender; and US buyout fund Carlyle.
KKR, which owns 63% of the firm, is seeking a valuation of Rs 5,500-6,000 crore for its nine-year-old investment. However, most bidders are unlikely to cough up such a high premium and are looking at a Rs 4,500-5,000 crore figure, the report said.
In May, Avendus launched its third future leaders’ fund that is targeting to raise Rs 3,000 crore ($350 million).
