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Nippon Life India AIF Set to Mobilize ₹1,000 Crore for Private Credit Expansion

In the dynamic financial landscape of Mumbai, Nippon Life India Asset Management has strategically entered the realm of private credit, aligning with the shifting trends following regulatory tightening by banks and mutual funds withdrawing from promoter funding. This move echoes similar initiatives by Centrum and Avendus.

Fundraising and Deployment

  • Fundraising Drive: Nippon Life India Alternative Investment Fund aims to raise a substantial `1,000 crore, targeting investors such as high-net-worth individuals and family offices.
  • Strategic Deployments: Having already invested 100 crore in two strategic deals, the fund is poised for further growth with a green shoe option to secure an additional 1,000 crore.

Opportunity Amidst Mutual Fund Exits

  • Credit Mutual Fund Exodus: With credit mutual funds vacating the space, Nippon identifies an opportune moment to step in, focusing on growth capital to address the needs of equity-starved promoters seeking expansion.
  • Stabilized Stressed Assets: The exit of private equity from India’s public market has resulted in a pipeline of stabilized stressed assets, intensifying the demand for private credit.

Investment Strategy

  • Target Investments: Nippon aims for investments ranging between 50 crore and 100 crore per deal, emphasizing an average maturity of 2.5 to 3 years.
  • Risk Management: The fund adopts a prudent approach with an amortizing principal component in its investment strategy.

Diversification and Rating Spectrum

  • Diversification Focus: Nippon’s strategy revolves around a concentrated portfolio, focusing on 10-12 securities.
  • Credit Quality: The fund primarily targets non-bank end uses within the ‘BBB’ to ‘A’ rating spectrum, balancing risk and return dynamics.

Return Expectations and Future Prospects

  • Return Projections: Ashish Chuglani, Head of Alternate Investments at Nippon Life India AIF, envisions mid-teen returns of 14-15% from the selected securities.
  • Pipeline of Investments: With a promising pipeline, the fund anticipates three upcoming investments, showcasing a commitment to sustained growth in the private credit space.

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