Axis AMC Unveils Private Credit Fund, Targets Robust Rs 1,250 Cr Corpus.

Axis AMC

Axis Asset Management (Axis AMC), the mutual fund division of Axis Bank Ltd, has introduced a private credit alternative investment fund (AIF), with the goal of garnering up to Rs 1,250 crore from potential investors. This move is being driven by Axis AMC’s commitment to exploring diverse investment avenues for its clients.

The newly launched private credit fund is a component of Axis Mutual Fund’s broader alternative assets portfolio. This portfolio encompasses an array of investment vehicles, including late-stage private equity and real estate AIFs tailored for the private markets segment. Moreover, it also consists of portfolio management services and long-only equity AIFs catering to the public markets domain. Axis AMC currently administers assets valued at around Rs 5,000 crore under these distinct investment categories.

Private credit funds play a pivotal role in funding thriving businesses that generate consistent cash flows. These businesses often require debt capital to address various needs, including merger and acquisition financing and facilitating promoter-led buyouts of existing shareholders.

Axis AMC

Axis AMC is actively engaged in discussions with a range of institutional investors, which notably include banks, insurance companies, and corporate treasuries. The objective is to secure commitments for the fund’s initial close. The initial closing is anticipated to take place within the coming four to six weeks. Furthermore, there is potential for involvement from family offices in this initial phase.

With strategic precision, Axis AMC is striving for a fund base size of Rs 1,000 crore. This will be complemented by a supplementary provision known as a “green shoe” of Rs 250 crore. Overall, Axis AMC is eyeing an impressive initial fund close of around Rs 500 crore.

It is worth noting that Axis AMC had previously undertaken a smaller-scale private credit fund endeavor, which had a corpus of Rs 200 crore. However, the current initiative is more ambitious in scale, aiming to draw the participation of institutional investors as well.

The private credit fund’s investment scope is remarkably versatile, covering various sectors without any specific bias. The fund aims to generate substantial gross yields, estimated to fall within the range of 13-14%, providing an attractive proposition for potential investors.

The introduction of Axis AMC’s private credit fund aligns well with the current landscape of the Indian investment market. There is a notable surge in the launch of private credit funds, signaling growing interest and opportunities in this domain.

Numerous notable institutions, including Kotak Alternate Assets Manager, JM Financial, InCred Capital, ASK Group, Vivriti Capital, and private equity fund managers such as True North, are actively exploring the launch of private credit funds.

The heightened interest in private credit stems from several factors, with taxation reforms playing a pivotal role. The removal of long-term tax benefits on debt mutual funds has created a level playing field and piqued the interest of a wider pool of investors in this asset class.

Amidst this dynamic market environment, several funds have entered the fray to capitalize on these opportunities. The credit risk mutual fund segment, which boasted assets under management (AUM) valued at around Rs 1.25 lakh crore in 2019, has now significantly contracted. This presents a substantial growth opportunity, particularly as non-banking financial companies (NBFCs) have scaled back their activities in this domain.

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