(Bloomberg) -- Vivriti Asset Management Pvt. is launching a new private credit fund for investing in small and medium-sized Indian companies, further capitalizing on the rising popularity of the asset class in the country.
The Chennai-based company aims to raise as much as 20 billion rupees ($240 million) for its Diversified Bond Fund Series II, the third such vehicle by the asset manager, Vineet Sukumar, founder and managing director of Vivriti, said in a joint media interview. The fund will have a tenor of five years and is targeting a pretax, annual rupee return of 15% to 16%, he said.
“We will largely focus our financing to operating companies that are profitable, where we can predict cash flows,” Sukumar said. The fund will stick to “lending directly to a business of a company rather than have repayments predicated on an event like an IPO or a refinancing,” he added.
Private credit is fast gaining a foothold in India despite warnings globally that the direct lending market, which has seen explosive growth over the years, is due for a reckoning as risks mount. There's still insatiable demand for private credit in the South Asian country, with global players including Cerberus Capital Management LP seeking opportunities in one of the world's fastest-growing major economies.
Read: Private Credit Fund in India Targeting Rich Raises $308 Million
Vivriti plans to lend to sectors including consumer goods, health care, infrastructure and manufacturing through the fund, Chief Investment Officer Soumendra Ghosh said in the interview, adding that 30 to 35 investments will be made. They plan to cap investments in any single issuer at 1 billion rupees to spread out credit risks, he added.
Founded more than five years ago, Vivriti recently saw its first private credit fund launched in 2019 mature returning its investors a yield of over 15.5%.
As India's private credit market expands, such high returns may be harder to sustain, as evidenced by the struggles seen in markets where the industry is more advanced. Major private credit players have cited intensifying competition, high interest-rate burden and the illiquid nature of underlying assets as key risks.
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