It will invest in the performing credit space with a credible promoter backing. It will aim to generate an 11-13%internal rate of return (IRR) with a four-year tenure.
Companies are now seeking private credit to build capacity as banks are unwilling to give out long-term loans. The asset manager has decided to raise the fund privately rather than making it public as the appetite for such instruments from retail investors is low particularly after the blow-up of Franklin Templeton’s schemes.
The minimum ticket size is Rs 1 crore. It is currently in talks with a host of family offices, financial institutions, and wealthy individuals to raise the money, market sources said.
ICICI Prudential AMC declined to comment on the matter.
The base size of the fund is pegged at Rs 1,000 crore with an option to retain subscriptions up to Rs 2,000 crore.
The funds will be backed by tangible collaterals. The money could be deployed through multiple pockets including exercising warrants, payout on account of family settlements, new business ventures, purchase of shares from the secondary market and buying out of private equity stakes.
The investee company can also use the proceeds to fund mergers and acquisitions and to infuse capital into subsidiaries.
Assets under management for private credit has been steadily growing globally. It has expanded multiple times to $848 billion in 2020 from $315 billion in 2010, shows a report from EY. “Private credit’s appeal lies in the higher yields and diversification benefits the asset class offers,” the consultant firm said in the report.
Back home, some top funds in this space including Edelweiss, Barings, Investec and Avendus are leading the trend.
ICICI Prudential has even reached out to global investors with the new fund offer and could well garner a few international investors, sources said.
High yield opportunities, according to EY are lucrative to investors, especially given the negative interest rate environment that persists in the global financial market.