BPEA Credit set to raise largest fund at $750 mn, rebrands to ‘Ascertis Credit’

The private credit platform of the erstwhile Barings Private Equity group, has raised four funds till date and has invested more than $1 billion over the last decade. The size of its previous funds was $161 million, $221 million, $475 million and $600 million. With over 40 exits across its funds, the firm claims to have clocked returns in the high teens.

Given that the fund is Asia-focused, India contributes a majority and continues to be the largest market for the investment firm. “Even in the foreseeable future, I think we will see India being the dominant market…with significant growth that is still to come. It is a very significant part of the portfolio," said Kanchan Jain, head of BPEA Credit Group, in an interview with Mint. 

Focus on India, Southeast Asia

Apart from India, Southeast Asia is an important segment for the firm. “Other than being the largest markets, they are also extremely underpenetrated. The opportunity is so big that we don't need to look at any other market," she said.

Also Read | Startup IPOs: Investors rush for exits as new capital takes a backseat

Founded in 2014 as BPEA Credit, the newly branded entity will continue to manage capital for marquee global pension funds and developmental financial institutions alongside a diverse set of Asian and Indian family offices. The investment firm has offices in Delhi, Mumbai and Singapore.

Ascertis Credit's income fund series

Earlier this year, Ascertis Credit also launched its new income fund series which goes by the name Select Short Term Income Fund—I (SSTIF) at a corpus size of ₹750 crore excluding a green-shoe option with a focus on stable, short-term investments in India. “We saw huge opportunities in the market within the credit space. This new series is a different product, but it still falls under performing credit and will provide growth capital to mid-market entities," Jain said.

While the capital requirements are generally for growth across both kinds of funds—Ascertis' private credit fund, and the new income fund series—they may have a different return and liquidity profile. They may also be different in other aspects such as tenure of the fund, leverage and some marginal differences in the size or companies targeted. For instance, the new income fund has a three-year duration as compared to the usual funds that have a five-year tenure. 

Also Read | Venture cautiousness: Why Blume, other VCs are treading safe despite IPO wave

The investment firm also operates on slightly different nuances of moderate leverage across both funds. Jain explained that investors find the need for a product that has a more regular coupon with a shorter duration and investee companies are also looking for similar solutions.

Niche areas

Broadly, private credit firms have a larger canvas to invest in niche areas such as irrigation projects, commercial and residential real estate and other underexposed areas in manufacturing and industrials that are not usually explored by the conventional private equity and venture capital ecosystem. “However, the kind of sectors we focus on changes slightly every 2-3 years when we raise a new fund depending on macroeconomic factors which could have negative effects in certain areas," Jain said.

With private equity and venture capital becoming increasingly focused on specific sectors, she added that this leaves a lot of gaps to fill in high growth sectors which don't get the growth capital they need. “This becomes a great private credit play... along with the added advantage of the fact that the actual downside is much more protected than it would be in the case of venture capital or private equity," Jain said.

Also Read | From growth at all costs to sustainable growth: the maturing of Indian startups