New Delhi, May 14 -- JM Financial Asset Management Ltd, which manages mutual fund schemes and alternative investment funds, is preparing to start raising a new private credit fund soon, a senior executive told VCCircle.
The unit of Mumbai-based JM Financial Group has previously raised two credit funds-a distressed assets vehicle that it launched in 2020 and a performing credit fund it floated in 2023. The new fund will follow the performing credit strategy, Amit Dharod, managing director for alternative assets at JM Financial Asset, said in an interaction.
The first performing credit fund hit its initial close in 2024 with Rs 600 crore. It marked its final close last year, Dharod said. He also said that this credit fund has invested nearly Rs 550 crore across 10 transactions. It has drawn down 80% of commitments so far and aims to finish deployment during the current quarter.
"The fund would have a couple of more years of investment period which allows it to recycle the principal repayments from portfolio companies. During its complete term, the fund expects to make between 12-14 investments," Dharod said.
To be sure, at the time of launching the fund three years ago, the firm had said it aimed to deploy as much as Rs 1,500 crore, including co-investments with its parent group.
The firm's plan for a new credit fund comes soon after it launched its first pre-IPO fund in February with a corpus of Rs 1,500 crore (around $165 mn). The pre-IPO fund is likely to mark its first close during the current quarter.
Dharod said the firm will likely launch the new credit fund by the end of June with a target corpus of Rs 1,500-2,000 crore. The fund will make transactions ranging from Rs 100 crore to Rs 200 crore, he said. The planned fund will also follow a "well-defined" investment philosophy and deal selection criteria. It will seek to invest in companies that have "robust cash flow generation, vintage, track record and strong promoter background", Dharod said
Broadly, the fund will build a well-diversified portfolio of senior secured investments. A majority of the investments will be structured to generate regular coupon flows with an amortized repayment schedule.
While JM Financial Asset will follow a sector-agnostic approach, it will avoid businesses that could get affected due to either onshore or offshore political developments or face a risk due to the regulatory framework in which they operate. It will also avoid exposure to early-stage real estate transactions.
"Portfolio construction would largely depend on promoter and company track record, vintage, availability of cashflow to repay our facility, security structure, robust operational and financial covenants and other forms of credit enhancements," Dharod said.
Published by HT Digital Content Services with permission from VC Circle.