New Delhi, June 1 -- ASK Alternates, part of the Blackstone-backed ASK Asset & Wealth Management Group, intends to start raising a special situations fund after floating its second private credit fund last month, a senior executive told VCCircle.
The planned investment vehicle will add to the firm's offerings that include two performing credit funds. In addition, the group offers real estate funds under ASK Property Fund as well as public market funds and portfolio management services under ASK Investment Managers.
Shantanu Sahai, head of private credit at ASK Alternates, said the firm plans to launch a special situations fund by next year targeting an internal rate of return (IRR) of 17-20%.
He added that the firm may target around Rs 500 crore (around $52 million) for the special situations fund and that it is likely to make 12-15 investments.
"Our clients will effectively get the full gamut of yields ranging from 13-20%, and they can allocate accordingly," he said, referring to the firm's private credit funds that target an IRR of 14-16%.
Performing credit strategy
In May, the firm launched its second private credit fund with a target corpus of Rs 2,500 crore. This includes a greenshoe option of Rs 1,500 crore. ASK Alts aims to make the first close of the fund by September.
"If the prevailing low return profile around equities continues, I am very optimistic that we will not only be able to exercise the greenshoe but significantly go past that number," he said, adding that many promoters are opting for the credit market for funding instead of the equity market. This means that private credit funds have more variety to choose from, which allows them to curate their portfolios better.
Broadly, the performing credit fund is targeting a gross IRR of 14-16% by investing in high-quality, market-leading businesses backed by reputed Indian promoters, global private equity firms, sovereign wealth funds, and global strategics. The strategy focuses on senior secured lending with tangible collateral, while avoiding exposure to real estate, distressed debt, venture debt, and struggling or asset-light businesses. The fund will focus on "old-economy" sectors like infrastructure, healthcare, renewables, and industrials, among others.
Specifically, the credit fund will invest across 12-15 transactions, with lower single-asset exposure of 6-7% and sector concentration below 10%. ASK Group may commit up to Rs 100 crore in the fund.
The fund will feature a reinvestment period of three-and-a-half years to enhance capital efficiency and generate higher distributed to paid-in capital, along with the ability to onboard offshore investors through a GIFT City-based feeder fund structure of ASK Group.
"The feeder will struggle with the effective dollar return on account of a significant depreciation in the rupee that we have seen over the course of this year. If things stabilize, we hope to get $50-60 million into the fund through our feeder," he said.
Overall, the firm expects around 65% of the Limited Partner (LP) contributions to come from family offices and the remaining 35% from institutions.
In December, ASK Alts marked the final close of its maiden performing credit fund at $63 million (around 569 crore). The fund delivered a gross internal rate of return of 15%, and has exceeded multiple key operating benchmarks, including higher coupon payouts and faster deployment timelines.
The firm has made three exits from the first fund-a large business in the airports industry, a healthcare business, as well as a renewable business. In turn, the fund has reinvested funds into a thermal power company, a specialty chemicals asset, and a healthcare firm. However, ASK did not disclose the names of these entities.
Published by HT Digital Content Services with permission from VC Circle.