(left)Ajay Hattangdi and (right) Vinod Murali
Venture debt firm Alteria Capital has raised ₹356 crore in the first close of its maiden ₹800-crore fund from a clutch of institutional investors and homegrown family offices, the firm said on Thursday. Induslnd Bank and a family office foundation were the anchor investors for the fund, called Alteria Capital India Fund I.
Founded by Ajay Hattangdi and Vinod Murali, former executives at Temasek-backed venture debt firm InnoVen Capital, last year, the firm aims to achieve final close of the fund by the second half of 2018. The firm also has a green shoe option of ₹200 crore, which will take its total corpus to ₹1,000 crore, making it the largest homegrown venture debt firm in terms of corpus.
While the first close had only domestic investors, Alteria will also explore foreign investors to achieve the ₹1,000-crore corpus.
“We have visibility for 70-75 percent of the fund from India. The rest will happen offshore,” said Vinod Murali, co-founder and managing director at Alteria Capital. “That fact that we are a debt fund has played to our advantage as we tapped into the domestic investor base. The domestic investors don’t want to take too much risk and get reasonably good returns. Debt is a fairly safe asset class and also has an equity element built in, so one can get decent double digit post tax returns,” he added.
The fund will look to deploy anything between Rs 2 crore and Rs 100 crore in companies.
“As the ecosystem matures, there are certain companies which are eligible for more leverage. There is a scope of ₹50-100 crore infusion in companies which are scaled up. The idea is to stay relevant to companies. So we start with series A, invest ₹2-3 crore and grow with the businesses. We want to be relevant through lifecycle of the company and ensure that cheque size does not become an issue,” said Murali.
Venture debt has picked up pace in India as venture capital firms clawed back on funding starting 2016. Unlike venture capital, where founders and existing investors end up diluting their holding in the company, venture debt allows them to raise funds without parting with more equity. They can borrow to meet working capital needs.
Startups such as Myntra, Snapdeal, Practo, Swiggy, Oyo, Shopclues and BigBasket among others have raised venture debt in the past. The growing appetite for debt among startups has gone hand in hand with the emergence of a number of venture debt funds of late.
While there are dedicated venture debt firms such as Alteria, InnoVen and Trifecta Capital, some venture capital firms such as IvyCap ventures and Unicorn India Ventures have also announced plans to raise debt funds.