Trifecta Capital makes $100 mn first close of third debt fund in just two months of fund launch

Trifecta Capital has secured investor commitments of $100 million (Rs 100 crore) to mark the first close of its third venture debt fund, Trifecta Venture Debt Fund – III, in just two months since the launch of the fund.

The whole first close sum is being raised from domestic limited partners (LPs), of which about 65-70 per cent of them are returning investors, Rahul Khanna, Managing Partner, Trifecta Capital told Business Today.

Khanna said most of its existing investors have participated in the new round. The existing LP base is a combination of banks, insurance companies, endowments, and family offices.

The fund has a target corpus of $200 million (Rs 1500 crore), and a final close is expected in the first quarter of 2021. Offshore investors will join the fund in its final close. The company will start deploying from Fund III later this month.

Fund II is fully drawn at present and the company plans to recycle the capital from the fund for at least two years. In a typical seven-year lifecycle of a venture debt fund, up to year five is the draw and recycling period and in year six and seven, the fund returns capital on the principal. To be sure, debt funds generate interest income all along its life which gets distributed on a quarterly basis. A fund of Rs 1500 crore could potentially do over Rs 3000 crore of credit during its life through recycling capital.

Trifecta has deployed over Rs. 2,700 crores of credit across its debt funds, and an additional Rs. 750 crores of equity in 7 startups from its equity fund so far.

It did 55 deals with Fund II and expects to back 60-70 companies with Fund III. Ticket size will be in the range of Rs 20-30 crore, same as Fund II. Some of the breakout startups from Fund II portfolio are Infra.Market, Dailyhunt, ShareChat, MyGlamm, ixigo, Servify, and BharatPe.

The company’s focus sectors include SaaS (Software as a Service), D2C (direct-to-consumer), B2B commerce, fintech, and e-commerce sellers.

Khanna said the company today has 85 firms in its portfolio, of which 15 are unicorns and 12 firms are valued between $500 million to $1 billion.

Earlier this year, the firm had announced the final close of its second venture fund as well as the first close of its maiden late-stage equity fund.

“Equipped with Venture Debt Fund – III, a customised technology platform offering financial advisory solutions and a late-stage equity fund, Trifecta Capital aims to consolidate its position as an innovator and financial partner of choice for the rapidly growing start-up ecosystem. Over the next two years, we will continue to introduce more interesting products and services to solve for large gaps within this ecosystem,” Nilesh Kothari, Managing Partner, Trifecta Capital said in a statement.

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