Franklin Templeton marks first close of maiden India credit fund

Global asset manager Franklin Templeton’s alternative investment arm, which manages its India alternatives business, has marked the first close of its maiden private credit fund after raising about a fifth of the target corpus. 

The new alternative investment fund, Franklin India Credit AIF – Scheme I, has secured Rs 205 crore ($24 million) in commitments from investors. The fund has a target corpus of Rs 1,000 crore and an additional greenshoe option of Rs 2,000 crore. 

The first closing milestone allows the fund managers to start making investments from the vehicle. 

The AIF is the first scheme under the Franklin Templeton Category II Alternative Investment Fund Trust registered with the Securities and Exchange Board of India (SEBI) in September last year. The fund aims to generate an internal rate of return of 12-13% and invest in 10-12 companies, VCCircle has gathered. 

It has a mandate to invest in secured debt securities of companies including primary issuances and secondary market purchases. The fund will make investments through instruments such as mezzanine debt, pass-through certificates, and market-linked debentures. It will likely have a significant exposure to financial services sector companies including non-banking finance companies and housing finance companies.  

The global asset manager launched its first AIF in India about seven years ago in 2018. The fund, Franklin India Long Short Equity AIF was a category-III open-ended fund with a mandate to generate capital appreciation returns over the medium to long term by investing in equity, equity-related securities and derivatives of companies domiciled in India.    

The alternatives business of US-based Franklin Templeton has assets under management valued at about $250 billion as of March-end. It operates across alternatives strategies including private equity secondaries and co-investment funds via its unit Lexington Partners, private credit via Benefit Street Partners and Alcentra, and real estate via Clarion Partners. It also operates hedged strategies, venture capital and digital assets businesses.