RV Capital Aims To Raise Up To $100 Million Through India Private Credit Fund

RV Capital Management, a Singapore-based asset fund manager, is aiming to raise $50 million to $100 million through its first India-performing private credit fund in the country.

With a total asset under management of $1 billion through its Asia funds, the company is looking to offer corporate financing through an equal mix of domestic and offshore investors.

"When we go to offshore investors, they want a proof-of-concept for the first fund in India, which is a small $50 to $100 million fund. Already in two months' time, we have reached roughly a quarter of our target," Ranodeb Roy, co-founder and chief investment officer of RV Capital Management, told BQ Prime in an interview.

RV Capital screens borrowers primarily on the basis of the strong collateral, structure and credibility of the promoters. The company is actively looking at corporates with high scores, beyond 40 on environmental, social, and corporate governance, for financing through private credit. As sustainability is gaining traction in India, several institutions are exploring financing options to support the development of capital-intensive technologies.

No matter how lucrative the returns are, RV Capital will not offer private credit to corporates running low scores on ESG, Roy said.

The country's strong macroeconomic fundamentals, pick-up in credit growth, and improvement in pricing have led to growth in the private credit market in India, said Shyamal Karmakar, who heads India investments for RV Capital.

"India's macros are strong, and the currency is also supported," Karmakar said. "Currency is a big factor for offshore investors. They get FX risk-adjusted returns; the FX hedge costs are low..."

Strong "information dissemination" along with improvements in the credit conditions of borrowers have strengthened the scope of private credit in the country, according to Karmakar. Understanding credit risk by way of a strong collateral structure is crucial to minimising default in the private credit market, he said.

"Defaults are always possible... but people are becoming more conscious of tight structuring, and some of this is being driven by offshore investments," Karmakar said. "It is a combination of offshore investors who are demanding covenants which cannot be breached and pricing the risk properly."

RV Capital has not had any defaults in its universe, Karmakar said.