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Economic Times
6 days ago
- Business
- Economic Times
Vivriti's Vintage I delivered 15.5% IRR—Here's how it navigated crisis and liquidity tightening
In a market environment riddled with pandemic-induced volatility, corporate credit stress, and tightening liquidity, delivering consistent returns was no easy feat. Yet, Vivriti Asset Management's Vintage I fund not only preserved capital but delivered a stellar gross IRR of 15.5%. In this edition of ETMarkets AIF Talk, Dipen Ruparelia, Head of Products at Vivriti AM, reveals how the firm's laser-sharp focus on private credit, disciplined portfolio construction, and proactive risk management helped navigate one of the most challenging investment periods in recent history—while staying true to its investor commitments. Edited Excerpts - ADVERTISEMENT Q) Vivriti Asset Management has returned over Rs.2,000 crore to clients so far. What has been the key driver behind this performance?A) Vivriti Asset Management, throughout its journey and since inception in 2019, has stayed focused only on private credit as a strategy and has managed funds true to its label. What has worked for us is a) identifying a deep structural opportunity in mid-market corporate lending (11-16% yield bracket) way back in 2019, b) setting up a private credit-focused AMC much earlier, and c) investing well in people and processes. We are proud to say that we have returned full capital and returns (beating investor communication) across three full scheme exits in Vintage 1. Our Vintage 2 funds are also in the run-down phase, where we have returned some capital, and full payback of principal is expected by Sep 26. Q) Your portfolios span infrastructure, logistics, financials, SaaS, and commercial real estate. What sectors do you find most promising in the current economic environment? A) Yes, we run diversified, sector-agnostic domestic fund mandates. Till date, we have invested in ~20 sectors, including airports, regional airlines, roads, renewable energy, co-working, smart meter manufacturing, and financials, among others. ADVERTISEMENT While our deals are more bottom-up selection, a few of the promising sectors are renewables, infrastructure, logistics, and warehousing, where we are seeing the maximum amount of capex are cautious on sectors which has greater external linkage due to ongoing global trade tensions and sectors like gems and jewellery, media, textiles, etc., due to historical governance issues in the sector. Q) Vintage I funds have delivered a gross IRR of up to 15.5%. How did you manage to generate such attractive risk-adjusted returns? ADVERTISEMENT A) Vintage Fund - I was launched in and around the pandemic times, in the aftermath of corporate crises of 2018, deployed mostly through 2020-21 battling uncertainties of modelling risks, and exited through 2023-24 amidst higher interest rates and tighter ability of the funds to generate attractive risk-adjusted returns is attributed to:• Our relentless eye on the macroeconomic environment leading us to pre-empt sector-level issues, guiding portfolio construction. ADVERTISEMENT • Primary asset origination and control on deal structuring to have greater control over the investee firms.• A strong focus on risk control, tracking portfolio performance, and acting on deviations, when needed.• Following a clear exit strategy, mostly through cashflows of the investee firms. Q) With the Diversified Bond Fund (Vintage III) targeting 15–16% gross IRR, what types of mid-sized firms are you focusing on, and how do you manage credit risk? ADVERTISEMENT A) The investee companies in Diversified Bond Fund Series II (Vintage III) are typically performing mid-market entities with proven business models, vintage of 7-10+ years, wherein they seek flexible debt from private credit funds like us as either the end-use isn't bankable or traditional lenders banks aren't able to create bespoke solutions which is required in a time-bound manner by the investee credit underwriting, control on deal terms, structuring, security, tighter covenants, un-compromised access to data, systems, and management, regular monitoring of portfolio companies, and pre-emptive decision making are the key pillars of our credit risk management. Q) What is semi-liquid private credit AIFs and how is it different from traditional closed-ended AIFs? A) Semi-liquid funds are an innovative investment vehicle that combines the benefits of both open-ended and close-ended funds while giving access to private markets to funds are structured as perpetual funds, giving the flexibility to investors to subscribe and redeem at regular pre-defined compared to typical close-ended private credit funds, Semi-Liquid scores better on:• Ability to see a 'build portfolio' when investing:o Given perpetual vehicle and being continuously available for subscription, an investor sees a 'build portfolio' with a track record since inception.o Close-ended funds have a limited availability period and a shelf life. They are also known as 'Blind-pool' funds as most of the investors enter with limited portfolio creation.• Quick access to private markets & no opportunity loss:o Semi-liquid funds don't follow a drawdown structure, which ensure full investment for investors in private credit markets.o Typical close-ended funds draw down capital over a 12-24 month period from initial close, thereby creating opportunity loss for investors till full capital is drawn down.• Option to receive regular income or allow compounding of income at the instance of the investor, which is not possible in close-ended funds.• Liquidity option and redemption of invested capital, when required by the investor versus run-down of fund in the last 1.5-2 years in multiple tranches in close-ended funds. Q) How do you balance the need for liquidity with maintaining portfolio returns in your semi-liquid and open-ended strategies? A) The investment strategy of semi-liquid funds is to invest in relatively shorter tenor amortising deals of mid-corporate liquidity aspect is managed through investing a small portion in cash and cash equivalent instruments, while a large part of liquidity is self-generating through principal amortisation across all the portfolio entities, tied to the frequency and redemption dates of the investors who have remained invested in the fund for the initial brief period till exit load implications, redemption of invested capital will come without any impact cost, subject to other redemption terms. Q) Who are semi-liquid private credit funds best suited for, and how are they addressing the unique liquidity concerns of HNIs, UHNIs, and family offices? A) Semi-liquid private credit funds are specially crafted for HNIs/UHNIs, investing typically from their individual, trust, or LLP A/cs. They are attractive for investors who area) looking at core debt allocation for an investment horizon of 1+ year OR investors who aren't comfortable locking in the capital for 4-6 years (which typical close-ended funds entail).b) looking for a post-tax, post-fees and expense return of 7% to 8% p.a from a diversified portfolio across multiple entities, run by a professional asset manager. It is also suitable for investors who prefer the flexibility of cashflows at their instance:i) Commit and deploy full capital in one single Receive predictable and stable regular income cashflows ORiii) Re-deploy the income and compound the income at a similar return profile without any hassle/delay. iv) Take out the invested capital along with income in a single tranche, subject to the redemption frequency and terms of the fund. (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
6 days ago
- Business
- Time of India
Vivriti's Vintage I delivered 15.5% IRR—Here's how it navigated crisis and liquidity tightening
Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel In a market environment riddled with pandemic-induced volatility, corporate credit stress, and tightening liquidity , delivering consistent returns was no easy Vivriti Asset Management 's Vintage I fund not only preserved capital but delivered a stellar gross IRR of 15.5%.In this edition of ETMarkets AIF Talk, Dipen Ruparelia, Head of Products at Vivriti AM, reveals how the firm's laser-sharp focus on private credit, disciplined portfolio construction, and proactive risk management helped navigate one of the most challenging investment periods in recent history—while staying true to its investor commitments. Edited Excerpts -A) Vivriti Asset Management, throughout its journey and since inception in 2019, has stayed focused only on private credit as a strategy and has managed funds true to its has worked for us is a) identifying a deep structural opportunity in mid-market corporate lending (11-16% yield bracket) way back in 2019, b) setting up a private credit-focused AMC much earlier, and c) investing well in people and are proud to say that we have returned full capital and returns (beating investor communication) across three full scheme exits in Vintage 1. Our Vintage 2 funds are also in the run-down phase, where we have returned some capital, and full payback of principal is expected by Sep 26.A) Yes, we run diversified, sector-agnostic domestic fund mandates. Till date, we have invested in ~20 sectors, including airports, regional airlines, roads, renewable energy, co-working, smart meter manufacturing, and financials, among our deals are more bottom-up selection, a few of the promising sectors are renewables, infrastructure, logistics, and warehousing, where we are seeing the maximum amount of capex are cautious on sectors which has greater external linkage due to ongoing global trade tensions and sectors like gems and jewellery, media, textiles, etc., due to historical governance issues in the sector.A) Vintage Fund - I was launched in and around the pandemic times, in the aftermath of corporate crises of 2018, deployed mostly through 2020-21 battling uncertainties of modelling risks, and exited through 2023-24 amidst higher interest rates and tighter ability of the funds to generate attractive risk-adjusted returns is attributed to:• Our relentless eye on the macroeconomic environment leading us to pre-empt sector-level issues, guiding portfolio construction.• Primary asset origination and control on deal structuring to have greater control over the investee firms.• A strong focus on risk control, tracking portfolio performance, and acting on deviations, when needed.• Following a clear exit strategy, mostly through cashflows of the investee firms.A) The investee companies in Diversified Bond Fund Series II (Vintage III) are typically performing mid-market entities with proven business models, vintage of 7-10+ years, wherein they seek flexible debt from private credit funds like us as either the end-use isn't bankable or traditional lenders banks aren't able to create bespoke solutions which is required in a time-bound manner by the investee credit underwriting, control on deal terms, structuring, security, tighter covenants, un-compromised access to data, systems, and management, regular monitoring of portfolio companies, and pre-emptive decision making are the key pillars of our credit risk management.A) Semi-liquid funds are an innovative investment vehicle that combines the benefits of both open-ended and close-ended funds while giving access to private markets to funds are structured as perpetual funds, giving the flexibility to investors to subscribe and redeem at regular pre-defined compared to typical close-ended private credit funds, Semi-Liquid scores better on:• Ability to see a 'build portfolio' when investing:o Given perpetual vehicle and being continuously available for subscription, an investor sees a 'build portfolio' with a track record since inception.o Close-ended funds have a limited availability period and a shelf life. They are also known as 'Blind-pool' funds as most of the investors enter with limited portfolio creation.• Quick access to private markets & no opportunity loss:o Semi-liquid funds don't follow a drawdown structure, which ensure full investment for investors in private credit markets.o Typical close-ended funds draw down capital over a 12-24 month period from initial close, thereby creating opportunity loss for investors till full capital is drawn down.• Option to receive regular income or allow compounding of income at the instance of the investor, which is not possible in close-ended funds.• Liquidity option and redemption of invested capital, when required by the investor versus run-down of fund in the last 1.5-2 years in multiple tranches in close-ended funds.A) The investment strategy of semi-liquid funds is to invest in relatively shorter tenor amortising deals of mid-corporate liquidity aspect is managed through investing a small portion in cash and cash equivalent instruments, while a large part of liquidity is self-generating through principal amortisation across all the portfolio entities, tied to the frequency and redemption dates of the investors who have remained invested in the fund for the initial brief period till exit load implications, redemption of invested capital will come without any impact cost, subject to other redemption terms.A) Semi-liquid private credit funds are specially crafted for HNIs/UHNIs, investing typically from their individual, trust, or LLP A/cs. They are attractive for investors who area) looking at core debt allocation for an investment horizon of 1+ year OR investors who aren't comfortable locking in the capital for 4-6 years (which typical close-ended funds entail).b) looking for a post-tax, post-fees and expense return of 7% to 8% p.a from a diversified portfolio across multiple entities, run by a professional asset is also suitable for investors who prefer the flexibility of cashflows at their instance:i) Commit and deploy full capital in one single Receive predictable and stable regular income cashflows ORiii) Re-deploy the income and compound the income at a similar return profile without any hassle/ Take out the invested capital along with income in a single tranche, subject to the redemption frequency and terms of the fund.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Economic Times
28-07-2025
- Business
- Economic Times
Rs 1 crore in 2017 would have grown meaningfully today: Northern Arc CEO on consistent credit AIF returns
Agencies Bonds offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution. In a financial landscape often dominated by volatile equities and underwhelming traditional debt products, credit-oriented Alternative Investment Funds (AIFs) have quietly carved a niche of stability and performance. In this edition of ETMarkets AIF Talk, Bhavdeep Bhatt, CEO of Northern Arc Investments, shares why credit AIFs — when backed by strong underwriting, sectoral expertise, and data-driven risk frameworks — have delivered consistent double-digit returns over the years. Bhatt points out that an investment of ₹1 crore in Northern Arc's flagship fund back in 2017 would have grown significantly today, with no instances of default or capital erosion. As India's bond market deepens and fixed income finds renewed favour in a softening rate environment, Bhatt makes a strong case for investors to explore this lesser-known but resilient asset class. Edited Excerpts – Q) Take us through the performance of the funds for the month of June. On a yearly basis, the fund has clocked over 12% return, PMS Bazaar data showed. It has been a steady performer since inception. Tell us how much wealth one would have maintained if he/she invested Rs 1 cr. at the launch of the fund back in 2017? A) At Northern Arc Investments, we have been in the business of credit AIFs and PMS for over a decade. Our track record reflects consistent and disciplined fund performance. Over the years, we've successfully exited six AIFs, delivering a gross XIRR of 14.57% on the matured notable is that across these funds, there has not been a single rupee loss or even a single day's delay in payout or fund every matured fund has seen the weighted average exit rating of the portfolio improve by at least one notch compared to the entry-level rating, an indication of both portfolio quality and prudent risk management. This disciplined approach has translated into strong and steady returns. As seen in recent PMS Bazaar data, our fund has clocked over 12% annual return, continuing its consistent performance since inception. An investor who had committed ₹1 crore at the launch of the fund back in 2017 would have witnessed meaningful wealth creation over this journey. Q) What is the investment objective? A) Our focused objective has always been Financial Inclusion and Risk-Adjusted Returns. Our investment approach aligns both with market opportunity and developmental impact. Each of our funds is crafted with a focused yet diversified example, Fund 4 is designed to invest in a broad pool of securities from sectors such as microfinance, affordable housing finance, small business loans, commercial vehicle finance, and agri-business broader objective is not just return generation but also to promote financial inclusion in the other hand, Fund 8 is tailored to invest in institutions that provide credit to microfinance institutions, small business finance companies, vehicle finance companies, corporates, and agri-business lenders—with the clear goal of earning higher risk-adjusted returns. Q) How do you manage risk in the fund? A) Risk management lies at the heart of everything we do. Our framework is built around what we call the High Touch, High Tech, and High Test model. High Touch: Within the Northern Arc ecosystem, a 35-member risk team evaluates financial, business, and governance risks. This includes regular site visits at the time of onboarding and throughout the investment tenure. Our underwriting guidelines are sector-specific, and we place significant emphasis on a company's ability to service debt from operating cash flows. We consciously avoid bullet repayment structures and holding company frameworks. High Tech: At the core of our tech-led risk framework is a comprehensive data lake capturing high-frequency data from our portfolio companies. Our proprietary analytics tools built on this this data infrastructure helps us identify patterns, interpret and forecast sectoral and geographic trends in credit origination and credit performance effectively. High Test: Each fund is guided by a robust Investment Committee consisting of seasoned credit professionals. Every fund has a unique IC, and each member holds veto power. This means that each investment is evaluated not just by the fund manager and risk team, but also through multiple experienced lenses, ensuring scrutiny, and direction on collateral and covenants. Q) What is the kind of impact you see on bonds amid falling interest rate scenario especially for corporate bond issuance? A) The current interest rate cycle has implications for the corporate bond market. Falling interest rates typically benefit the bond market, leading to appreciation in existing bond prices and making new issuances more attractive for India's debt-to-GDP ratio at a two-decade low, we anticipate greater bond issuance activity as corporates look to refinance high-cost debt or fund new expansion already seen a surge in corporate bond issuances, driven by the RBI's easing interest rates and the need for cheaper financing said, liquidity particularly in the secondary market for retail investors remains a space still under development. Q) What is your take on the corporate bond market in India and how has it evolved over the past few years? A) Globally, credit markets are often larger than equity markets. While India is not there yet, its bond market is witnessing a decisive shift. Two major trends stand out:Record Growth in Issuances: FY25 has seen companies raise a record ₹9.9 lakh crore in corporate bonds, a 28% increase over the previous not only signals stronger market confidence but also increased corporate capex total bond market in India now stands at ₹226 lakh crore, with corporate bonds contributing over ₹53.6 lakh from Bank Lending to Bonds: More Indian companies are now turning to bond markets instead of traditional bank offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution.(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
Time of India
28-07-2025
- Business
- Time of India
Rs 1 crore in 2017 would have grown meaningfully today: Northern Arc CEO on consistent credit AIF returns
In a financial landscape often dominated by volatile equities and underwhelming traditional debt products, credit-oriented Alternative Investment Funds ( AIFs ) have quietly carved a niche of stability and performance. In this edition of ETMarkets AIF Talk, Bhavdeep Bhatt, CEO of Northern Arc Investments , shares why credit AIFs — when backed by strong underwriting, sectoral expertise, and data-driven risk frameworks — have delivered consistent double-digit returns over the years. Bhatt points out that an investment of ₹1 crore in Northern Arc's flagship fund back in 2017 would have grown significantly today, with no instances of default or capital erosion. As India's bond market deepens and fixed income finds renewed favour in a softening rate environment, Bhatt makes a strong case for investors to explore this lesser-known but resilient asset class. Edited Excerpts – Q) Take us through the performance of the funds for the month of June. On a yearly basis, the fund has clocked over 12% return, PMS Bazaar data showed. It has been a steady performer since inception. Tell us how much wealth one would have maintained if he/she invested Rs 1 cr. at the launch of the fund back in 2017? Explore courses from Top Institutes in Please select course: Select a Course Category Project Management Design Thinking Product Management Digital Marketing Management healthcare Cybersecurity Public Policy Data Analytics Data Science PGDM Others MCA Finance others Technology Leadership Degree MBA Data Science CXO Operations Management Skills you'll gain: Project Planning & Governance Agile Software Development Practices Project Management Tools & Software Techniques Scrum Framework Duration: 12 Weeks Indian School of Business Certificate Programme in IT Project Management Starts on Jun 20, 2024 Get Details Skills you'll gain: Portfolio Management Project Planning & Risk Analysis Strategic Project/Portfolio Selection Adaptive & Agile Project Management Duration: 6 Months IIT Delhi Certificate Programme in Project Management Starts on May 30, 2024 Get Details A) At Northern Arc Investments, we have been in the business of credit AIFs and PMS for over a decade. Our track record reflects consistent and disciplined fund performance. Over the years, we've successfully exited six AIFs, delivering a gross XIRR of 14.57% on the matured funds. What's notable is that across these funds, there has not been a single rupee loss or even a single day's delay in payout or fund maturity. Moreover, every matured fund has seen the weighted average exit rating of the portfolio improve by at least one notch compared to the entry-level rating, an indication of both portfolio quality and prudent risk management. This disciplined approach has translated into strong and steady returns. As seen in recent PMS Bazaar data, our fund has clocked over 12% annual return, continuing its consistent performance since inception. An investor who had committed ₹1 crore at the launch of the fund back in 2017 would have witnessed meaningful wealth creation over this journey. Q) What is the investment objective? A) Our focused objective has always been Financial Inclusion and Risk-Adjusted Returns. Our investment approach aligns both with market opportunity and developmental impact. Each of our funds is crafted with a focused yet diversified mandate. For example, Fund 4 is designed to invest in a broad pool of securities from sectors such as microfinance, affordable housing finance, small business loans, commercial vehicle finance, and agri-business finance. The broader objective is not just return generation but also to promote financial inclusion in India. On the other hand, Fund 8 is tailored to invest in institutions that provide credit to microfinance institutions, small business finance companies, vehicle finance companies, corporates, and agri-business lenders—with the clear goal of earning higher risk-adjusted returns. Q) How do you manage risk in the fund? A) Risk management lies at the heart of everything we do. Our framework is built around what we call the High Touch, High Tech, and High Test model. High Touch: Within the Northern Arc ecosystem, a 35-member risk team evaluates financial, business, and governance risks. This includes regular site visits at the time of onboarding and throughout the investment tenure. Our underwriting guidelines are sector-specific, and we place significant emphasis on a company's ability to service debt from operating cash flows. We consciously avoid bullet repayment structures and holding company frameworks. High Tech: At the core of our tech-led risk framework is a comprehensive data lake capturing high-frequency data from our portfolio companies. Our proprietary analytics tools built on this this data infrastructure helps us identify patterns, interpret and forecast sectoral and geographic trends in credit origination and credit performance effectively. High Test: Each fund is guided by a robust Investment Committee consisting of seasoned credit professionals. Every fund has a unique IC, and each member holds veto power. This means that each investment is evaluated not just by the fund manager and risk team, but also through multiple experienced lenses, ensuring scrutiny, and direction on collateral and covenants. Q) What is the kind of impact you see on bonds amid falling interest rate scenario especially for corporate bond issuance? A) The current interest rate cycle has implications for the corporate bond market. Falling interest rates typically benefit the bond market, leading to appreciation in existing bond prices and making new issuances more attractive for companies. With India's debt-to-GDP ratio at a two-decade low, we anticipate greater bond issuance activity as corporates look to refinance high-cost debt or fund new expansion plans. We've already seen a surge in corporate bond issuances, driven by the RBI's easing interest rates and the need for cheaper financing options. That said, liquidity particularly in the secondary market for retail investors remains a space still under development. Q) What is your take on the corporate bond market in India and how has it evolved over the past few years? A) Globally, credit markets are often larger than equity markets. While India is not there yet, its bond market is witnessing a decisive shift. Two major trends stand out: Record Growth in Issuances: FY25 has seen companies raise a record ₹9.9 lakh crore in corporate bonds, a 28% increase over the previous year. This not only signals stronger market confidence but also increased corporate capex activity. The total bond market in India now stands at ₹226 lakh crore, with corporate bonds contributing over ₹53.6 lakh crore. Shift from Bank Lending to Bonds: More Indian companies are now turning to bond markets instead of traditional bank credit. Bonds offer greater flexibility in instrument structuring, better pricing especially in a falling interest rate environment and the ability to raise capital without equity dilution.
