Four ex-senior bankers have started their own alternative investment firm in India called Catalyst Financial, which is raising $300 million to invest in Indian private debt.
The capital will be divided between two debt funds, one onshore and the other offshore, and use a direct lending strategy to provide senior secured debt to mid-cap corporates in India. The two funds are looking at a gross return of 16 percent to 18 percent with a typical investment size of $10 million to $15 million, Siddarth Bhargava, a founder of Catalyst Financial and former Goldman Sachs executive, told PDI.
Of that $300 million, the onshore fund hopes to raise $100 million from domestic investors and the offshore fund aims to raise $200 million from foreign investors.
The onshore fund, which will reach a $50 million first close in September, has already attracted investments from local family offices and institutional investors. The offshore fund, for its part, will start pre-marketing later this year.
Bhargava emphasised the funds will not look at real estate and infrastructure sectors in India.
“The real estate sector is oversupplied. Although the return is higher, the risk is higher as well,” Bhargava explained. “For infrastructure, there are too many large companies in the field and too many regulations. At the same time, the infrastructure sector in India are mostly non-performing assets.”
Catalyst has already applied to Securities and Exchange Board of India for registration as an alternative investment fund few weeks ago and is expected to receive approval within the next four to six weeks.
Alongside Bhargava, the founding partners of Catalyst include Ashutosh Maheshvari, Amit Khosla and Suraj Warrier. Masheshvari was the former CEO of Motilal Oswal. Khosla worked at private equity fund Asiabridge Capital while Warrier has worked in structured finance across various firms such as CRISIL, Rabo India and Motilal Oswal.