Former senior executives of InnoVen Capital, Ajay Hattangdi and Vinod Murali, plan to launch Alteria Capital, touted to be the country’s biggest venture debt fund with a corpus of Rs 1,000 crore.
Alteria Capital will have a corpus of Rs 800 crore ($125 million) with a greenshoe option of raising an additional 200 crore ($30 million), according to Hattangdi and Murali, who said the process of registering it with capital markets regulator Securities and Exchange Board of India (Sebi) is on.
Unlike InnoVen Capital, which operates as a non-banking finance company (NBFC), Alteria will be registered as a category II alternative investment fund (AIF), with a tenure of seven years and a possible extension of two years.
The venture debt fund is looking to make the maiden close of the fund by the first quarter of 2018, with a target to raise 25-50% of the corpus ( 250-500 crore) to enable deployments around the same period, Hattangdi, a managing partner at Alteria Capital, told.
At 1,000 crore, Alteria Capital will be India’s largest venture debt fund yet with cheque sizes ranging from 3 crore at the series-A level to 100 crore.
Hattangdi’s and Murali’s exit from InnoVen Capital in June.
Hattangdi and Murali, both of whom were earlier with Citibank, launched US-based Silicon Valley Bank’s (SVB) venture lending operations here in 2008 and played a key role in pioneering both the asset class as well as scripting InnoVen’s success in this market.
At InnoVen, they had played a crucial role in facilitating debt investments to some of the largest startups, like ShopClues, Byju’s, Swiggy, OYO Rooms, Practo, Snapdeal and Pepperfry, with investments in FY17 aggregating $225 million ( 1,500 crore).
“From an operating standpoint, the AIF is a more efficient vehicle to invest, especially with regard to exits for investors,” Hattangdi said. Last August, the regulator modif ied rules for alternate investment funds to simplify the categories under which the funds will be bracketed, and also cut down on requirements of investment by the general partners or sponsors of the fund, thus making it easier for fund managers to float their funds.
Hattangdi and Murali, who is also managing partner at Alteria Capital, expect the registration process to be over by mid-September, after which they will begin the official fund raising process.
Alteria Capital has received interest from a host of offshore and domestic investors who are looking at the asset class as an attractive bet to invest in the Indian ecosystem. US-based endowment funds and family offices, Indian banks and financial institutions, as also domestic family offices and Indian Ultra HNI groups have shown keen interest in the fund as potential investors.
Beyond venture debt, the duo also plan to earmark under 10% of Alteria Capital’s fund for selective, small equity-based investments (up to $1 million) in startups that have borrowed debt from them in the past.
“It is more about plugging the rounds so that a series-B or -C round happens faster. We just juice up and improve our returns,” said Murali.
Typically venture debt investments follow equity rounds in companies, but Alteria Capital will also look at enabling investments in startups where venture capital investments have not been made, if the business fundamentals remain strong.
Source: Times of India
