Sundaram Alternates has just wrapped up raising ₹1,100 crore for its Emerging Corporate Credit Opportunities fund, which is all about providing debt finance to small and medium enterprises with turnovers ranging from ₹200 crore to ₹1,000 crore.
Sundaram Alternates is a part of Sundaram Finance Ltd, a big player in the non-banking finance company scene. The fund, called ECCO-I, made its debut in June 2022. It’s all about putting money into high yielding debentures and mezzanine securities of companies in the MSME, SME, Fintech, Manufacturing, and Services sectors.
Karthik Athreya, Head of Fund Strategy (Private Credit), let us know that ECCO-I closed successfully in October after pulling in ₹1,100 crore from investors. He also spilled the beans about the company’s plans to open a branch in the GIFT city in Gandhinagar to attract foreign capital.
What’s more, Sundaram Alternates is in the middle of raising its fourth real estate fund, targeting a pool of funds between ₹1,000 crore and ₹1,500 crore. Right now, they’ve got ₹250 crore from investors, including high net-worth individuals, family offices, and institutional investors. Athreya is feeling pretty confident about getting another ₹250 crore soon, saying, “We have more deals than we have money for.”
The real estate finance market in India, especially the debt segment, is a big deal for Sundaram Alternates. Even though it’s pricier than banks, real estate developers turn to funds like Sundaram Alternates because of the regulatory restrictions on banks’ lending activities. Athreya made it clear that this industry is supported by regulatory arbitrage, and it’s not going anywhere.
As for the potential for growth in the real estate debt finance market, Athreya explained that the market size is about $25-30 billion, with the segment finance-able only by funds hitting around $10 billion and growing at a rate of 10-15 per cent. With only $3-4 billion being invested in this segment, there’s a lot of room for expansion.
Sundaram Alternates’ ongoing efforts to provide financial support to SMEs and real estate developers show their dedication to promoting growth and innovation in these sectors.
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