Sundaram Alternates, an arm of Chennai-based Sundaram Group, on Thursday launched its fourth high-yield credit fund with a corpus of Rs 1,500 crore. The new fund seeks to raise Rs 750 crore with a green shoe option worth Rs 750 crore, taking the aggregated target size to Rs 1,500 crore. The fund will focus on sub-Rs 100 crore deals, which offers fund diversification as well as attractive risk-rewards, Vikaas M Sachdeva, managing director of Sundaram Alternates, said.
The fund will target gross deal returns ranging between 18 per cent and 22 per cent on a senior secured basis, Karthik Athreya, a director and head of strategy at the company, said.
Sundaram Alternates has so far deployed over Rs 2,000 crore over the past seven years.
The Sundaram Alternative opportunities high yield secured real estate fund – IV is designed to provide investors access to a diversified portfolio of secured realty investments, with a focus on self-liquidating residential projects across key Southern micro-markets, in addition to last-mile financing, project acquisitions, and select rescue financing, among others offering good returns.
Its earlier three real estate credit funds have delivered consistent returns to investors over the past five years, the company said in a statement without quantifying the returns.
The fund aims to create a largely growth-oriented portfolio and build key developer relationships within the real estate categories of mid-market residential, hybrid, and commercial projects that offer attractive down-side protected returns, the statement said.
Around 75 per cent of the fund allocation will be directed towards projects with visible cash flows to ensure downside protection and regular income streams to investors and the remaining will be tactical/opportunistic investments that provide higher returns to boost portfolio performance, Athreya said, adding, the hallmarks of their real estate credit policy have been priority cash flows, amortising investments and our differentiated multi-layered security structures that incentivise timely repayments.
Sundaram Alternate Assets, a 100 per cent subsidiary of Sundaram Assets Management Company, caters to the investment needs of high net-worth individuals with offerings across portfolio management services and alternative investment funds.