Sundaram Alternates (SA), the alternative investment arm of the Sundaram Finance Group, is launching AlphaBet – Series I, a crossover investment product designed to combine the high-conviction equity investing with structural downside mitigation through secured private credit investments.
The strategy aims to raise ₹1,500 crore, with a green shoe option of ₹500 crore. It will be structured to generate long-term capital appreciation from equities while incorporating a complementary secured credit portion for income visibility and portfolio.
The fund will be targeting 18–20 per cent deal-level returns with portfolio-level investor returns expected in the mid-teens range. 51-60 per cent of the portfolio would comprise of solid bets around equity in a ‘flexicap’ strategy with weightages between large, mid and small caps. The remaining would be private credit bets out of their own private credit platform, where SA has done close to $1 billion worth transactions.
Equity exposures
Speaking to businessline about the product, Karthik Athreya, Managing Director, Sundaram Alternates, said that goal is to offer a product, where investors take select equity exposures, which are research-driven with three to four year potential to make serious alpha and at the same time mitigate the volatility with a private credit strategy where SA has had a solid track record. “The product has actually come out of a feedback from our own large investors, family offices, etc, who want this sort of a mix,” he said.
“Our objective is to build a differentiated alternates platform anchored around CAAS — ‘Capital as a Solution’ — combining disciplined underwriting, product innovation and risk mitigation,” he added.
Following the recent correction in the mid and small cap segments, Sundaram Alternates believes several fundamentally strong companies are now available at more attractive valuations. AlphaBet is designed to capitalise on these opportunities through a disciplined equity selection framework while maintaining portfolio resilience through structured credit.
Fundraising cycles
With Sundaram Alternates’ fundraising cycles getting shorter, Athreya anticipates around 6-8 months, where they will keep the fundraising open and should see enough subscription in that window. We are already in some base level of interactions with some of our LPs, he said.
With regard to the impact of successive geopolitical events on the equity markets, Athreya says that volatility is currently at its highest, and he sees equity performance to be ‘sideways’, leading to a need for such a crossover product. “I think, over the next year and a half or so, there is going to be sideways performance, while the India growth story is clearly evident and visible,” he said.
Sundaram Alternates currently manages approximately ₹9,500 crore in assets across private credit, liquid fixed income and bespoke equity portfolios, serving high net-worth individuals, family offices and institutional investors.