Alteria reaches first close on India venture debt fund

Anchor LPs include an unnamed family office and IndusInd Bank, a former partner of InnoVen Capital when the firm was known as SVB India Finance. The fund is planned to be the largest venture debt instrument in India with a final close of INR8 billion targeted for the second half of 2018. It may be extended by a INR 2 billion greenshoe option.

Murali and Hattangdi left InnnoVen in August last year and began formal fundraising for Alteria after receiving regulatory approval in November. The firm attributes its fundraising traction within this timeframe to strong sentiment for venture debt related to predictability of yield, equity upside and weak performance of competing asset classes including fixed income.

Alteria's founders helped establish the venture debt industry in India around 2008 and have leveraged their contacts from this experience in the current fund. However, no InnoVen LPs have participated in the Alteria fund. To date, all investors are India-based but the firm expects to be the first investor of its kind to attract overseas commitments. A number of US foundations have expressed interest in participating, and up to 35% of the final corpus is expected to be international.

"Offshore investors have been very clear that they want to see the right kind of track record," Murali told AVCJ. "Debt is a product where you need 7-10 years of seasoning to establish that the product works, that you're able to collect, and you're able to show that the portfolio behaves in a particular way. That's unlike equity, where you could have 2-3 good outcomes up front that encourage a faster fundraise."

Commitments from US LPs are expected to be confirmed in the first half of the year, although timing of future closes will depend on progress with the deal pipeline. Alteria expects its first two investments to be finalized within the month. Check sizes will range up to INR1 billion and target start-ups across the early-stage to growth rounds.

"In a sense, we create a baseline for start-ups because we're not constrained by stage, size or sector," Murali added. "Wherever companies are doing well, differentiated, have strong sponsors, and there's a way to help founders reduce dilution, there's a role to be played from a debt perspective."

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• Topics
• South Asia
• Venture
• Fundraising
• GPs
• Financing
• India
• Innoven Capital
• Structured finance