Modulus India Credit Opportunities Fund II

Question 1

About AMC

Answer 1

About Modulus Alternatives
Modulus Alternatives Investment Managers (Erstwhile Centrum Alternatives) was incorporated in 2018. AMC has established a successful track record of investing in private credit strategies.
AMC has an established track record of investing in private credit strategies and manages AUM of ~2,380 Cr (Invested capital) across 20 investments.
AMC has exited 13 investments and returned ~1,250 Cr cumulative capital
Investment team size of 4 members along with 9 members of operations and sales support team.

About Fund Manager
Rakshat Kapoor has over 20 years of experience in private credit. He has worked on turnaround situations & restructurings, distressed debt and private equity across the capital structure in different sectors.
Prior to Modulus Alternatives, he has worked with Nomura Securities, Deutsche Bank’s structured credit investments and ICICI Bank’s structured finance team

Question 2

Investment Strategy

Answer 2

Investment Strategy
Fund will invest in performing credit opportunities of reasonably sized companies (EBITDA of INR 50-200 crore) with 10-20 years of operating history across business cycles.
Focus on sectors with positive tailwinds i.e. sectors likely to outperform in the medium-long term.
Diversified investment portfolio of 12-16 companies with sector concentration capped at 25%, an average deal size of Rs 100 – 150 Cr (including Co-Investments). Average Fund Ticket Size: 25-75 Cr.
Senior secured investment with minimum 2x cover.
Active fund management with continuous portfolio monitoring on monthly/quarterly basis.

Preferred Sectors
Consumption, Industrials, Healthcare, Chemicals, Select Infrastructure and Auto ancillaries

Sectors avoided
Trading businesses, Gems and Jewellery, Mining, Greenfield Infrastructure, Standalone Real Estate, Media and Highly Regulated Sectors.

Question 3

Investment Process

Answer 3

1. Deal Origination (100%)
   Private Equity, Corporates, Commercial Banks, and Advisory Firms
2. Pre - Qualified Deals (30%)
   Sector Assessment, View on Promoter, Public Due Diligence
3. Qualified Deals (10%)
   Management Meetings & site visits, Independent Experts’ view
   Independent Diligence – Legal/Financial/Commercial/ Forensics DD
4. Deploy (2%)
   Credit Structuring, Legal Documentation, and Closing

Question 4

Portfolio Features

Answer 4

Fund Category Category II AIF, Closed Ended
Sponsor Commitment Rs 5 Cr or 2.5% of the aggregate Capital Commitments, whichever is lower
Fund Size 750 Cr + 500 Cr Green Shoe
Fund Tenure 6 Years from Initial Close + 1 + 1
Commitment Period 36 Months from final close
Minimum Investment Amount Rs. 2.5 Crore
Minimum Add-on Investment Amount In 1 Lac multiples
Gross Target IRR 16%+
Management Fee Structure* Share Class
A1 :1.75% + 15 % Carry over 10% Hurdle Rate - 1 Cr - 10 Cr
A2 : 1.6% + 15 % Carry over 10% Hurdle Rate : 10 Cr - 25 Cr

NRI Eligibility Operating expenses shall be up to 0.25%
Operating Expense NRIs can invest including US and Canada based NRIs
Fund Status 1st close: 24th Aug 2023
Total Fund raised as of Aug’24 ~Rs 400 Cr