Franklin Templeton Plans Foray Into Private Credit in India

Signage at the Franklin Templeton Investments offices in New York, US, on Tuesday, July 12, 2022. With companies now taking longer to go public, CEO Jenny Johnson wants to bring more private investment opportunities to everyday customers. Photographer: Jeenah Moon/Bloomberg

(Bloomberg) -- Franklin Templeton's India unit is preparing a private credit fund, according to people with knowledge of the matter, which will enable it to lend to companies in a market where banks and shadow lenders have retreated from all but the highest-rated credit.

Santosh Kamath, who was chief investment officer at Franklin Templeton Asset Management (India) Pvt., will manage the new strategy, the people said, asking not to be identified as the details aren't public. Kamath's appetite for high-yield Indian debt helped create the nation's market for lower-rated corporate bonds and turned him into one of the country's best-known investors before Templeton was forced to freeze and wind up six of his funds in 2020 when demand for riskier assets dried up amid the coronavirus lockdowns.

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The firm has also hired Rahul Goswami from ICICI Prudential Asset Management Co. to replace Kamath as CIO and lead its fixed income business, the people said.

A formal announcement on the management changes is expected as early as Tuesday. Franklin Templeton India didn't reply to an email seeking comment.

Templeton joins global managers like Apollo Global Management, Cerberus Capital Management LP, Varde Partners and The Carlyle Group, which are stepping up operations in one of the world's fastest-growing economies. While still a fraction of the global $1.5 trillion assets under management for private credit, India has notched the highest investment volume in Asia over the last five years. India-focused assets under management for private debt nearly doubled to $15.5 billion as of December 2022 from a year earlier, according to financial data provider Preqin.

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The firm will soon file with the Securities and Exchange Board of India for a license for a category II Alternative Investment Fund, which will allow it to begin preparing for the private credit fund, the people said. Category II funds are meant for private equity, private credit, distressed assets funds.

A target size for the private credit fund will be decided after it gets the license, the people said.

Moneycontrol had previously reported Goswami taking over the fixed income operations.

(Updates with background)

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