Aditya Birla Sun Life Asset Management Company plans to raise ₹2,500 crore through launch of ABSL Structured Opportunities Fund Series-2 in alternate investment space.
The company has already raised ₹250 crore as part of the promoters’ contribution and deployed them in couple of deals. The fund house targets to achieve first closure by early next year and close the fund for subscription in 12 months thereafter. The 5.5 years close-ended fund targets to deliver a return of 14-16 per cent by part-financing corporate capex, opportunistic and strategic capital.
A Balasubramanian, Managing Director and CEO, ABSL AMC, said with potential growth in economy size, the private sector credit is estimated to reach $10 trillion by FY36 and this should result in private sector investment of ₹25-30 lakh crore over next 3-5 years.
Private sector credit
Currently, he said the private sector credit to GDP in India is significantly low as compared to Asian peers and should throw up an $100 billion opportunity even if it inches close to global peers.
Grouped under performing credit, the fund house will provide tailor-made growth capital, pre-IPO financing, acquisition finance and facilitate PE exit. This apart, it will tap into strategic opportunities by funding promoters to consolidate their holding and funding cash flow mismatch after conducting tight due-diligence to protect the capital.
Bank credit to large industries has fallen to 16 per cent of their gross lending last fiscal against 24 per cent in FY19. Similarly, lending through MF credit risk funds has fallen drastically to ₹23,141 crore last fiscal against ₹58,362 crore in FY19.
Opportunities for AIF
This provides a big opportunity for an alternative investment fund to fill in the gap and provide much-need capital for the private sector, he said.
The current market size of performing credit is estimated at ₹1.5 lakh crore and provides ample opportunities for alternative investment fund to tap this space vacated by banks and NBFCs, he added.
As part of risk mitigation process, the ABSL Structured Opportunities Fund Series-2 will restrict exposure to single borrower to 15 per cent and cap sector at 30 per cent.
It will avoid lending to over-leveraged companies, asset light sectors such as trading businesses, services companies, gem and jewellery industry and EPC (engineering, procurement and construction).