New Delhi, March 10 -- Sundaram Alternates, the alternative investment arm of the Sundaram Finance Group, has started raising a new fund that will invest in listed equities and also strike private credit transactions.
The AlphaBet - Series I fund has a target corpus of Rs 1,500 crore (around $163 million) and a greenshoe option of Rs 500 crore, the company said in a statement.
AlphaBet will construct two complementary portfolios. The first will invest in large, mid- and small-cap listed companies with strong balance sheets, low leverage and sustainable growth potential. The second portfolio will comprise senior secured private credit investments in mid-market companies, backed by cash flows and real assets.
The firm said that the equity investments will act as the primary return driver while the secured credit component will provide periodic income and help moderate overall portfolio volatility.
"Following the recent correction in the mid- and small-cap segments, we believe several fundamentally strong companies are now trading at more attractive valuations, creating opportunities for disciplined long-term investors," said Karthik Athreya, managing director, Sundaram Alternates.
The fund will also invest in selective special situations, including brownfield real estate opportunities. It aims to deploy capital across sectors where the firm sees long-term value despite geopolitical developments, commodity price volatility, currency movements and interest-rate cycles.
The firm said that the new strategy aims to achieve a deal-level internal rate of return (IRR) of 18-20% with portfolio-level returns expected in the mid-teens range.
Sundaram Alternates manages approximately Rs 9,500 crore in assets across alternative investment funds, portfolio management services, equity business and advisory services.
Since 2017, the firm has deployed over Rs 5,000 crore across 85 deals through performing credit, special situations and real estate credit funds. The return profiles across these strategies range from 14-21%, with performing credit yielding 14-15%, special situations yielding 17-18%, and real estate credit targeting an IRR of 18-21%.
In addition to the hybrid fund, the firm is raising its maiden performing credit fund and its fifth real estate credit fund. It is also preparing the groundwork to raise Rs 1,000-1,500 crore for a second private credit fund for special situations investing in the second half of 2026, Athreya told VCCircle in a recent interaction.
Published by HT Digital Content Services with permission from VC Circle.