Key Takeaways
- • TVS Capital Funds (TCF) is entering private credit through a new platform, TVS Alts, targeting secured lending to performing mid-market companies in India.
- • TVS Alts has received internal approvals for a Category II Alternative Investment Fund and has filed with SEBI, with regulatory approval expected in the coming weeks, according to BusinessLine.
- • The initial fund targets ₹750 crore with a ₹500 crore green-shoe option, ticket sizes of ₹40-100 crore, and projected returns of 16-17%.
- • The first close is targeted within six months of regulatory approval and the final close within 12-14 months; the team has evaluated 42 opportunities, with two or three under consideration.
- • Domestic capital is the expected base, with potential investors including insurance companies, bank treasuries and corporates; TCF owns 90% of TVS Alts and co-founder Shyam Srinivasan owns 10%.
Summary
TVS Capital Funds (TCF), a private equity firm founded by Gopal Srinivasan, is expanding beyond its equity roots into private credit as it enters its 20th year. The firm has launched TVS Alts as an extension of its investing activity, according to BusinessLine.
TVS Alts has received internal approvals for a Category II Alternative Investment Fund and has filed applications with the Securities and Exchange Board of India (SEBI), and expects the necessary regulatory approvals in the coming weeks. Shyam Srinivasan, Co-founder and Executive Chairman of TVS Alternatives, said the initial target is a fund of ₹750 crore with a green-shoe option of ₹500 crore. The fund will focus on secured lending with ticket sizes of ₹40-100 crore, targeting returns of 16-17%. The strategy is sector-agnostic and will focus on performing companies with sound credit profiles and adequate security, covering bridge financing, pre-IPO financing and M&A-related funding.
Like the group's equity business, the private credit strategy is expected to be built on domestic capital, with potential investors including insurance companies, bank treasuries and corporates. TVS Alts hopes to complete a first close within six months of regulatory approval and a final close within 12-14 months. The initial fund is expected to make around 14-15 investments over its life. The investment team has already evaluated 42 potential opportunities, of which two or three are being considered against its underwriting and pricing requirements; active deal origination will begin after regulatory approvals.
Manish Makaria is Managing Partner. The board includes IFC's Prasad Gopalan, banking veteran Ashutosh Khajuria, former SIDBI executive Mani Krishna Iyer and industrialist Srilalitha Gopal. Srinivasan said credit quality in the mid-market was holding up well and that private credit could gain further from banks becoming more selective in lending to mid-sized businesses. TCF recently closed its fourth private equity fund with a corpus of nearly ₹4,000 crore, and the private credit move is seen as a step toward broader financial services, including wealth and asset management, over the long term. TVS Capital could also raise additional private credit funds over the next three to five years.
TVS Alts has received internal approvals for a Category II Alternative Investment Fund and has filed applications with the Securities and Exchange Board of India (SEBI), and expects the necessary regulatory approvals in the coming weeks. Shyam Srinivasan, Co-founder and Executive Chairman of TVS Alternatives, said the initial target is a fund of ₹750 crore with a green-shoe option of ₹500 crore. The fund will focus on secured lending with ticket sizes of ₹40-100 crore, targeting returns of 16-17%. The strategy is sector-agnostic and will focus on performing companies with sound credit profiles and adequate security, covering bridge financing, pre-IPO financing and M&A-related funding.
Like the group's equity business, the private credit strategy is expected to be built on domestic capital, with potential investors including insurance companies, bank treasuries and corporates. TVS Alts hopes to complete a first close within six months of regulatory approval and a final close within 12-14 months. The initial fund is expected to make around 14-15 investments over its life. The investment team has already evaluated 42 potential opportunities, of which two or three are being considered against its underwriting and pricing requirements; active deal origination will begin after regulatory approvals.
Manish Makaria is Managing Partner. The board includes IFC's Prasad Gopalan, banking veteran Ashutosh Khajuria, former SIDBI executive Mani Krishna Iyer and industrialist Srilalitha Gopal. Srinivasan said credit quality in the mid-market was holding up well and that private credit could gain further from banks becoming more selective in lending to mid-sized businesses. TCF recently closed its fourth private equity fund with a corpus of nearly ₹4,000 crore, and the private credit move is seen as a step toward broader financial services, including wealth and asset management, over the long term. TVS Capital could also raise additional private credit funds over the next three to five years.
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