Sundaram Alternates, the alternative investment arm of Sundaram Finance Group, has successfully closed its second real estate credit fund, achieving a gross internal rate of return (IRR) of 17%.

According to the company, the SA RE Credit Fund II, which raised about Rs 435 crore, primarily invested in secured, high-yielding debentures issued by Indian real estate developers, with a focus on micro markets in South India.

The firm began raising the fund in the first quarter of FY20 and made its final close in 2021. The fund's target size was Rs 500 crore, and it aimed to generate a return of 17-21%, according to its previous disclosures and investor presentations.

According to the statement, it pursued a credit strategy with diverse capital allocation, a risk-adjusted approach to underwriting and de-risking of brownfield projects backed by consistent sponsor commitments of over 15%.

The firm has cumulatively raised over Rs 2,600 crore across four dedicated funds. It has deployed over Rs 4,200 crore across 74 deals with contracted IRRs of 19%. Over the past eight years, the firm has completed 38 full exits and over 10 partial exits, generating cumulative proceeds exceeding Rs 2,600 crore.

The broader alternative investments platform at Sundaram now manages more than Rs 7,000 crore in assets under management, spanning private credit, liquid fixed income, and bespoke equity strategies.

Mr. Karthik Athreya, Director & Head – Strategy for Alternative Credit, Sundaram Alternates, said, with increasing institutionalisation of private credit, interesting opportunities and a growing appetite for risk-adjusted returns from Indian investors, we believe this is a defining decade for private financing in India—and our goal is to position Sundaram Alternates as a dependable and trusted partner to investors as they allocate to these asset classes.