Vivriti Asset Management closed three credit funds with commitments of a total $ 200 million recently. It has also launched $250 million asset back securitisation fund early this year. Vineet Sukumar, founder and managing director tells Raghavendra Kamath, about the company’s strategy, going forward. Excerpts:
In May, you launched an asset back securitisation fund of $ 250 million. How much have you raised and when do you plan to close this fund?
Nearly half of it is now raised. The fundraising period is going to continue for a while because at the end of the day like everybody, we also like to see how the international markets are moving. So we have agreed with our LPs (limited partners) that we have a cumulative period of 18 months to raise the full corpus. But in the meantime, we have begun deploying and using the money and making investments in the domestic market.
What is your fund raising plans in the coming year?
We’re launching fresh products and we should come to the market soon with more information. We can’t disclose the exact nature or the products now. We are still at the formative stage. These products are coming to internal committees for approval and so on and we are taking market feedback.
Are you planning to also diversify in any new areas in the coming months?
No, I think the coming year is going to be about more scaling up rather than diversifying.
How do you plan to scale up?
Vivriti as a group currently manages a little over a billion dollars of assets under management right now, roughly $ 1.1 billion. And this has grown well both in terms of AUM as well as profitability and my endeavour is to make sure that our profitability continues to grow as a group. We have cumulatively lent to around 350 mid corporates in the last six years. And the endeavour is to now grow that base rapidly. So in terms of number of funds, assets under management, profits in all of this we’ve seen a good growth path in the last six years and the aim is to kind of build upon this.
So what kind of investments you plan to do in the coming year.?
See where the public company and therefore not able to make forward looking statements, but Vivriti today onboards approximately 10 companies a month. which is a very good number for a mid- corporate lender. And we hope to kind of build upon our our skill. We are pretty much the only specialist in the mid corporate performing credit space. And we hope to capitalize upon the first mover advantage that we have built.
Lot of domestic investors have entered the private credit space. Some experts say this lead to overcrowding and will under-pricing of the risk. Do you agree with this theory?
The private credit market cannot be treated with a one-size-fits-all approach. It is segmented. Broadly, there are three kinds of private credit. One of them is venture debt, which is basically debt for the start-ups. The second being, debt capital for special situations. For instance, promoter finance or in case a company needs a significant funding for a large pay out or needs to get refinancing. And the third category is performing credit, wherein, a company with positive cash-flow, needs debt for further growth. Now quite a few international credit funds, as well, as domestic players are vying for deals in the first two cases because the IRRs are very attractive and the deal size is quite large. However, the performing credit category is less tapped, as there are thousands of potential mid-market enterprises that need debt funding. Over the next five years, we might see anywhere between 4000 and 5000 companies in this category.