Baring Private Equity Asia (BPEA) is currently fundraising for its first India-focused credit fund after its acquisition of Religare Global Asset Management’s credit unit in India.
The target of the fund is set at INR5 billion ($74 million; €69.5 million) with a greenshoe option of INR2.5 billion. It is expected to reach a close in the first quarter this year, according to PDI sources close to the matter.
The fund will provide credit to established mid-market companies and advanced-stage real estate development projects.
“We understand that mid-market companies often have profitable track records, established brands, strong market positions and excellent growth prospects, but have very limited access to capital to facilitate growth. We seek to provide flexible credit solutions to these companies,” the firm said on its website.
Last year, the firm acquired Religare Global Asset Management’s credit unit in India and appointed Kanchan Jain, CEO and principal managing partner of Religare Credit Advisors, to head its credit business in India.
The BPEA credit platform will focus exclusively on India due to a perceived critical need for private lenders.
The Religare credit team launched its own $160 million dedicated Indian credit fund, Fund I, in 2014 and the fund was fully deployed before the acquisition. The team will continue to manage the fund until its maturity, the sources told PDI.
Fund I has made 21 loans to growing businesses, with almost half of the fund total being distributed back to investors within the first two years of its life, according to BPEA’s website.
“Access to credit remains a significant challenge for most India private enterprises, particularly those in the mid-market space…India has one of the shallowest banking / finance sectors in both the developed and developing worlds and very low levels of domestic credit to the private sector,” the PE firm said. “What little capital that is available typically gets directed towards large corporates which receive more than 80 percent of all bank credit.”
BPEA is not the first private equity player that has started to grow a private credit business in India. Global private equity firm KKR is one of the most active investors in India. Despite having raised five dedicated India-focused credit funds with vintage years between 2014-2016, the manager also has two non-banking financial companies in the country.
BPEA has traditionally been a private equity investor since it was first launched in 1998. The firm has $10 billion in assets under management. It provides growth capital and also runs a private credit and private equity real estate programme. In 2015 the firm raised the third-largest pan-Asian private equity fund in the region, just behind the mega-funds raised by buyout giant KKR ($6 billion) and Asian investment firm RRJ Capital ($4.5 billion), according to PDI Research & Analytics.