New Delhi, Aug. 6 -- Capital Stack, an investment bank facilitating domestic debt issuance, cross-border debt issuance and structured finance among other services, is set to launch a private credit fund soon.
The Chennai-headquartered company will apply to the Securities and Exchange Board of India (SEBI) for a category-II alternative investment fund (AIF) license, according to a senior official at the firm.
"Our immediate priority is to get the AIF licence in the current quarter and kickstart the funds business. We intend to start the fund raising and conclude the deployment in FY27," Varoon Naidu, co-founder and managing director of Capital Stack said, adding the company will launch the private credit fund via its subsidiary Capstack Asset Managers.
The company intends to launch its maiden fund by February 2027 and finish deployment in another month since they have identified a pipeline of opportunities. The fund will target a corpus of Rs 500 crore (around $53 million), including a green-shoe of Rs 200 crore. The fund will allocate 60% of its corpus to non-banking financial companies, and the remaining 40% to medium-sized businesses from other industries.
Broadly, the fund will invest in around 15 entities and target an internal rate of return (IRR) of 14% in rupee terms.
"We will target NBFCs in the Rs 300-500 crore AUM bracket that do secured lending and are Triple D," he said, adding the fund may stay away from NBFCs that do payday loans or housing finance loans since these products garner lower yields.
Typically, Payday loans are personal loans with a ticket-size of less than a lakh, and a tenor of three-to-six months.
The maiden fund will be managed by Capital Stack co-founder Ashish Thekkekara, VCCircle learnt.
Background, financials
Capital Stack was founded in 2022 by former Northern Arc Capital executives Thekkekara, Naidu and Prasanna Kumar V L V.
The company offers strategic advisory, debt advisory, equity advisory, treasury management, and mergers and acquisitions advisory. It specialises in areas such as structured finance, cross-border debt issuance and investor relations.
The company claims to have facilitated debt financing of around Rs 13,000 crore from various investors. These include term loans, working capital loans and acquisition finance.
Capital Stack's bottom line rose to around Rs 4 crore in the financial year ended March 2026 from Rs 2 crore a year ago, aided by revenue growth. The topline jumped to Rs 14 crore in FY26 from nearly Rs 9 crore in the previous year.
The company said it clocked a revenue of Rs 6.3 crore in the June quarter and expects the topline to jump 50% year-on-year (y-o-y) in FY27.
"We increased our focus on hiring over the last 12-18 months. We brought in more industry experts and were able to execute transactions faster," Naidu said.
Published by HT Digital Content Services with permission from VC Circle.