For the ABSL Structured Opportunities Fund Series-2, the company has raised Rs 250 crore in promoters’ contributions, which have already been invested in several deals. The fund aims to achieve its first closure by early next year. It plans to close for subscriptions within the following 12 months. This close-ended fund, lasting 5.5 years, targets 14-16% returns by financing corporate capital expenditures and pursuing opportunistic and strategic investments.
A. Balasubramanian, Managing Director and CEO of ABSL AMC was quoted as saying that, with the potential for economic growth, private sector credit is projected to reach $10 trillion by FY36. This growth is expected to drive private sector investments of Rs 25-30 lakh crore over the next 3-5 years.
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Positioned within the performing credit funds group, ABSL Structured Opportunities Fund Series-2 will offer customized growth capital, pre-IPO financing, acquisition financing, and facilitate private equity exits. Additionally, it will pursue strategic opportunities by providing funding to promoters for the consolidation of holdings and addressing cash flow mismatches, all while ensuring rigorous due diligence to safeguard capital.
Bank credit to large industries decreased to 16% of total lending last fiscal year, down from 24% in FY19. Similarly, lending through mutual fund credit risk avenues has significantly dropped to Rs 23,141 crore last fiscal, compared to Rs 58,362 crore in FY19. Bala emphasised that this trend creates a substantial opportunity for alternative investment funds to bridge the capital gap for the private sector.
The current market size for performing credit is estimated at Rs 1.5 lakh crore, offering considerable opportunities for alternative investment funds to enter the space left by banks and NBFCs, he added.
To mitigate risk, the ABSL Structured Opportunities Fund Series-2 will limit exposure to a single borrower to 15% and sector exposure to 30%.
The fund will steer clear of lending to over-leveraged companies and asset-light sectors, such as trading businesses, service companies, the gem and jewellery industry, and EPC (engineering, procurement, and construction) firms.
