BharatPe, Zepto-backer Alteria Capital marks first close of third fund at Rs 1000 cr

Venture debt provider Alteria Capital has achieved the first close of its third fund at Rs 1000 crore to back VC-backed early and growth stage start-ups.

The company has received approvals from Capital markets regulator Securities and Exchange Board of India (SEBI)  in Q2 2022 for its third venture debt fund with a target corpus of Rs. 1000 Cr and a greenshoe of Rs. 1000 Cr.

The company said it witnessed strong interest from domestic investors including family offices, senior professionals, and founders to participate in this attractive asset class despite the macroeconomic volatility. With Rs. 3800 crore of Assets under management (AUM), Alteria claims to manage the largest pool of capital for venture debt currently.

The fund’s cheque sizes can go up to Rs. 150 crore, the company said, adding that the third fund will have a separate scheme to provide working capital solutions to start-ups.

“For the venture debt asset class, India is a relatively younger market compared to its global peers which reflects a significant opportunity for raising and deploying capital. With the third fund, we hope to play a meaningful role in bridging this gap over the next few years,” Punit Shah, Managing Partner, Alteria Capital said.

The ability to recycle capital further increases the capital stock for venture debt providers like Alteria. In a typical seven-year lifecycle of a venture debt fund, the draw and recycling period is till year five, while the fund returns capital on the principal in the last two years. To be sure, debt funds generate interest income all along its life which gets distributed on a quarterly basis. A fund’s recycle ratio is typically 1.8-2x during the investing period, which means a fund of $100 million could potentially do over $200 million of credit during its lifecycle by recycling capital.

Alteria Capital was started in 2017 by Vinod Murali and Ajay Hattangdi. It counts a list of hyper-growth start-ups including several unicorns among its portfolio such as Rebel Foods, Spinny, Mensa Brands, Good Glamm Group, Infra.market, BharatPe, Cars24, and Zepto.
 

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