Sundaram Alternates launches INR 1500 Crore Real Estate Private Credit Fund The company said that approximately 70-75% of the fund’s allocation will be directed towards projects with visible cash flows post approvals thereby ensuring downside protection and regular income streams to investors

Sundaram Alternates, an arm of Chennai-based Sundaram Group, on Thursday launched its fourth high-yield credit fund with a corpus of INR 1,500 crore. The company stated that with the robust outlook for the real estate sector and its performance over the last 12 months, RE Credit Fund IV aims to create a largely growth-oriented portfolio and build key developer relationships within the real estate categories of mid- market residential, hybrid and commercial projects that offer attractive down-side protected returns.

“We would like to introduce our 4th fund in the real estate private credit space, open for subscriptions, to our esteemed investors. This fund allows us to leverage our expertise and market insights to identify compelling investment opportunities in the real estate sector. By focusing on a range of opportunities within the sector, we aim to provide investors with a well-rounded and diversified portfolio,” said Vikaas M Sachdeva, MD, Sundaram Alternates.

The company further said that approximately 70-75% of the fund’s allocation will be directed towards projects with visible cash flows post approvals thereby ensuring downside protection and regular income streams to investors. The remaining 25-30% will be tactical/ opportunistic investments that provide higher returns to boost portfolio performance.

“Our key underwriting philosophy will continue to centre around protecting our investors’ capital through stringent credit metrics and prudent risk management strategies. Hallmarks of our real estate credit policy have been strong LTVs, priority cash flows, amortising investments and our differentiated multi-layered security structures that incentivize timely repayments,” said Karthik Athreya, director and Head of Strategy- Alternative Credit, Sundaram Alternates.

The new fund seeks to raise INR 750 crore with a green shoe option worth INR 750 crore, taking the aggregated target size to INR 1,500 crore. The fund will focus on sub-INR 100 crore deals, which offers fund diversification as well as attractive risk-rewards, stated the company.

Moreover, as per the company, similar to its earlier 3 real estate credit funds that delivered consistent returns to investors over the past 5 years, this fund is designed to provide investors with access to a diversified portfolio of secured real estate investments, with a primary focus on self-liquidating residential projects across key South Indian micro-markets.