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Baring Private Equity likely to raise up to Rs 1,500 crore via credit fund

MUMBAI: Baring Private Equity Asia (BPEA) is set to raise up to Rs 1,500 crore through a dedicated credit fund that will invest in local bonds sold by mid-sized Indian companies, said two people aware of the matter. It is seeking to tap credit opportunities that traditional lenders appear to be skipping.

The company has already applied to the Securities Exchange Board of India, said one of the sources cited above. The company aims to raise anything between Rs 1,000 and 1,500 crore. The application will fall under one of the Alternative Investment Fund (AIF) categories.

“The proposed fund would be sector agnostic as it will look into company financials irrespective of any rating grade,” an executive told ET.

Those bonds would be backed by collateral.

Typically, the company lends to businesses with proven execution and repayment track record. Those borrowing companies are supposed to be financially secure with good cash flows but require capital to support the continued growth of their businesses.

BPEA declined to comment on the matter.

It will raise money from global asset managers, pension funds, insurers and wealthy investors, sources said.

The fund would be divided into two portions – the core and an option to retain oversubscription.

BPEA is part of the Baring Asia platform, which globally manages billions of dollars.

“BPEA Credit is exclusively focused on India due to the critical need for private lenders to provide debt capital to businesses that are otherwise unable to access debt to grow,” it said on its website.

Since September when infrastructure conglomerate IL&FS triggered a crisis of capital through a series of defaults, small to mid-sized companies have struggled to raise money.

“Access to credit remains a significant challenge for most Indian private enterprises, particularly those in the mid-market space,” the company said on the site. “What little capital that is available typically gets directed toward large corporates who receive more than 80% of all bank credit.”

Earlier in 2017, BPEA had raised a similar credit fund for Rs 750 crore.

It made 21 loans to successful and growing businesses and has resulted in almost half of the fund being distributed back to investors within the first two years of its life.

BPEA has so far made 37 debt investments all through credit funds for which the transaction value is about $310 million.

Those have returned 21% on an average (internal rate of return) to investors.

The company entered India in 2006.