Performing Credit fund, a performing credit fund is a sector-agnostic fund with a substantial capital commitment from CDPQ (Caisse de dépôt et placement du Québec) to invest in mid to large-sized corporates across sectors.
Managed by an experienced credit evaluation team with successful past investment experience, PCF is a performing credit fund looking to deliver higher yields whilst extending credit to mid-market companies and situations that are not catered adequately.
A large part of the wholesale lending market in India comprises banks, NBFCs and Mutual Funds, which are more focused on large corporates and liquid securities. This results in a significantly high credit spread for mid sized corporates and creates an opportunity for earning superior/meaningful risk-adjusted returns for our investors.
Key Pillars for Performing Credit Fund are :
Well Thought Through Investment Strategy
India is passing through a phase of secular multi-sectoral growth and the Fund intends to follow a disciplined investment approach to address the most appealing opportunities. The investment strategy of the Fund takes into consideration the growth in the Indian economy from USD 2 trillion to USD 5 trillion in the next few years, thereby providing significant investment opportunities across various sectors.
The Fund focuses its investments primarily in sectors such as manufacturing, consumer, healthcare, chemicals, pharmaceuticals, logistics, services including IT & ITes, SAAS etc. but remains sector agnostic for relevant opportunities. These focus areas are among a broader set of sectors that we intend to target; with a particular emphasis and focus on companies with a history of cash generation in respective businesses.
PCF takes a partnership approach towards debt solutions targeted to assist the companies in mitigating temporary cash flow mismatch situations, growth capital, acquisition financing including leveraged buyouts, consolidation of shareholding including PE stake purchase.
The investment objective of the Fund has been derived based on our collective strengths and expertise, deep research on the sectors we target, past investment experience and track record, as well as valuable learnings from the prior investing experience.
Key Tenets of Investment Strategy :
Invest in Mid-Market Corporates
Mid-market corporates are the mainstay of the Indian economy contributing a significant portion of industrial output and Indian exports. Most of these mid-market corporates aspire to become large institutionalized organizations over the next decade. The key challenges faced by these mid-market corporates are the availability of capital, a focus on corporate governance and the ability to attract the right talent.
Many mid-market corporates have a robust business model as compared to an early-stage company. Additionally, these companies have the ability to grow at a higher rate when compared with larger corporates. Capital is the raw material required to fuel their growth ambitions. The Fund will look to -partner with these under-served companies by providing supportive growth capital, solving special situation funding requirements of the company that cannot be catered by banks/traditional financial institutions etc.
The Fund is focused on investment themes such as solving for inefficient capital structure leading to temporary cashflow mismatch, providing growth capital to companies, acquisition funding, special situation funding like last-mile funding etc. The Fund could potentially invest in:
Inefficient capital structure leading to temporary cash-flow-mismatches situations: Tailored/structured solutions for companies facing temporary cash flow mismatch situations including refinancing with tenor elongation etc.
Growth capital to companies: Growth capital to mid-market companies which do not have access to funding from banks/other traditional financial institutions
Special situation funding like last-mile funding: Last-mile funding to companies requiring additional funding to complete the final leg of their CAPEX plan
Acquisition financing: Acquisition funding to companies looking for inorganic growth through acquisitions
Stake Consolidation: Promoter funding for consolidation of stake in listed/unlisted companies
Mezzanine Structures: Holdco investment structures for part promoter contribution in Opco, stake buyout etc.
Robust Investment Process
All potential investments follow the process below:
Strong Focus on Risk Assessment and Monitoring
A robust risk management system involves a rigorous underwriting process, internal and external diligence and identification of key items to be monitored at the underwriting stage itself. Active portfolio management and monitoring involve constantly mapping and escalating any early warning signals and ongoing feedback to the counterparts about creating further efficiencies in their capital structure, capital allocation and subsequent fundraising dynamics.
Status of the Fund
We are actively looking to deploy funds. For any deal related queries, opportunities, please reach out to email@example.com