Alteria hits first close on second India venture debt fund

Alteria said in a social media post that its assets under management now amount to INR23 billion - representing the largest pool of capital focused on venture debt for Indian start-ups. The Mumbai-based GP closed its debut fund in mid-2019 with INR9.6 billion in commitments, beating a target of INR8 billion.

The new fund, which was launched in December, has surpassed expectations in terms of market interest, with more than 200 investors connecting with Alteria via video call in the past few months. LPs in the new fund are all local, including high net worth individuals, family offices, and institutions. Historically, LPs include Indusind Bank & Small Industries Development Bank of India.

“The speed of disbursal of domestic capital is at an all-time high,” Vinod Murali, a co-founder and managing partner at Alteria, told The Times of India. “We have had a very strong run to get here. But the real slog starts now. We want to definitely focus on deployment and portfolio management.”

Alteria will write checks of up to INR1.5 billion for start-ups across the early and growth stages. Later stage companies will have access to structured debt products. The firm currently has 28 portfolio companies across a range of sectors, with standouts including financial technology providers Lendingkart and BharatPE.

LP interest in venture debt is generally attributed to the funds’ ability to generate a regular return with the potential to outperform the market. For start-ups, the asset class represents a funding option that is less dilutionary on equity and that can be mobilized with more flexibility when needed.

Venture debt remains an emerging strategy in Asia, although India is typically cited as having a relatively advanced ecosystem. Much of the groundwork here was laid by Murali and fellow Alteria co-founder Ajay Hattangdi, who began experimenting with a non-fund structure as early as 2008 under the name SVB India Finance.

SVB India was acquired by Singapore’s Temasek Holdings in 2015 for INR3 billion and was renamed InnoVen Capital. Murali and Hattangdi left to establish Alteria in 2017. Last year, Alteria engaged two new partners, Ankit Agarwal and Punit Shah, both of whom were previously at InnoVen.

Other operators in this space include Trifecta Capital, which closed its second fund venture debt fund last month at $140 million, more than doubling the size of its debut in 2017. Meanwhile, Northern Arc Investments, previously known as IFMR Investment Managers, has reached a first close of $23 million on a micro and small business-focused fund.

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• Topics
• South Asia
• Fundraising
• Credit/Special Situations
• India
• Alteria Capital
• venture debt
• Structured finance