Axis Structured Credit AIF – II

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About Axis AMC

Portfolio management services and alternative investment funds are offered by Alternates by Axis AMC, giving investors the chance to diversify their portfolios beyond the usual stock and fixed income assets. Due to their low connection to conventional asset classes, alternative investments help to diversify portfolios. Our adventure began in 2017 with the release of our flagship PMS product, Axis Brand Equity Portfolio. This led the way for a variety of strategies in late-stage private equity, real estate, structured debt, and listed equity (second PMS issuance and several Cat-III AIFs) (Cat-II AIFs). These strategies reflect the investment requirements of our investors as well as our capacity as a financial institution. The individuals behind these strategy verticals have extensive experience, and their knowledge is assisting us in expanding this company, which is essential to achieving our entire asset management goals, which also include Alternates, Global Feeder Structures, Passives & ETFs, and Mutual Funds. To take advantage of synergies, we strategically collaborate with our group firms.

Fund Snapshot

Category: Category II AIF – Close ended
Confidence capital: 10% of the fund up to Rs. 100 Crores
Target Size: INR 1000 Cr + INR 250 Cr (Green Shoe)
Commitment Period: 24 months from final closing; option to extend by two additional periods of 6 months
Term: 5 years from the date of initial Closing. Extensions up to 2 years (1+1) Years
Investment Manager: Axis Asset Management Company Limited
Investment Manager’s Commitment: 2.5% of the aggregate Capital Commitments or Rs. 5 crores (whichever is lower)
Target Deal IRR: 13-14%
Proposed Portfolio Size: 12–14 transactions
Target Deal IRR: 13-14%
Capital Structure: Class A Units: Refer Structure Below | Class B Units: To the Investment Manager and Sponsor

Unique Features of Axis Group

Axis Bank

  • Significant presence in corporate lending with loan book of more than Rs. 2,30,738 crore covering large and mid-corporate segments
  • Strong eco-system with benefits of close integration among various entities in group
  • Ranked No.1 arranger for rupee denominated bonds for 16 consecutive years

Axis Capital

  • Axis Capital’s proven expertise in Equity Capital Markets, M&A Advisory & Private Equity is the backbone of successful Structured Finance practice for a decade
  • Originated structured debt transactions with Unscathed track record of ‘No Default’ in any transaction for more than 12 years

Axis AMC

  • Fixed Income AUM exceeding Rs 89,000 Cr across MM, corporate bond & credit strategies 
  • A complete range of solutions across equities, fixed income, international equity, multi asset and passive solutions
  • Experienced credit research team and dedicated Credit risk fund with strong track record

Axis Finance

  • More than 25,000 crore of wholesale loan book
  • Large origination team with strong borrower relationship 

Axis AMC – Fixed Income Capabilities

Experienced credit research team

  • Large coverage of more than 250 issuers across sectors
  • In-house support from high quality sectorial expertise of equity research team to identify sector specific trends
  • Investment in high yielding instruments with tight structuring and rigorous monitoring

Successfully invested and exited in structures (with aggregate amount exceeding Rs. 2000 crore) such as

  • Promoter finance backed by strong collaterals and tight covenants
  • Securitization
  • Multi originator collateralized debt obligation backed by credit enhancements

Risk management is an integral part of credit process

  • Consistently maintained high credit ratio (upgrade/downgrade ratio) for the portfolio

Key Features

The Opportunity

  • Asset quality concerns for NBFC’s and regulatory restrictions on MF’s to participate in structured credits has created a vacuum
  • Axis Structured Credit AIF-II will target such opportunities to create a granular portfolio of performing credits

Track record

  • Axis AMC launched Scheme 1 (Axis Structured Credit AIF-I) in Oct 2021.
  • Tracking gross yield of 13%; invested through secured NCD backed by strong collaterals
  • Regular distribution as majority exposures are coupon paying
  • Launching Scheme 2 (Axis Structured Credit AIF-II) based on similar strategy

Transaction Characteristics

Sector-agnostic approach. Transactions will include

  • Secured exposures backed by strong underwriting history of AMC and collateral structuring
  • Promotor financing backed by strong covenants and share pledge
  • Cash flow-based structures with dedicated and ring-fenced cash pool

Portfolio Mix

  • Proposed Portfolio Size: 12–14 transactions
  • Target Deal IRR : 13-14%

About Fund Manager

Dhaval Patel – Fund Manager, B.E. (Electronics) NIT Surat, MBA – IBS Hyderabad, FRM

Mr. Dhaval Patel has over 15 years of fund management & credit research experience in India. His previous experience includes Axis Mutual Fund and CARE Ratings. Before moving to the alternatives segment at Axis AMC, Dhaval was a co-fund manager for credit strategies at Axis Mutual Fund. In addition, he looked after the credit research and portfolio monitoring for the fixed income team. He was deeply involved in development & management of fund strategies especially credit oriented schemes and oversaw implementation.

At CARE Ratings, Dhaval led a team of credit analysts and was responsible for assignment and monitoring of credit ratings to large corporates from diverse sectors.

Key aspects of the Process

Origination of transactions

Preliminary discussion with the team

Underwriting

Detailed analysis, discussion with Axis Group and AMC research team

Due Diligence (Legal & Financial)

Portfolio Monitoring

Risk and Compliance reporting

Liquidity/Exit

Well defined framework

Risk Management - Limits

Issuer Limits/Sector limits

  • Not more than 10% with a single issuer
  • Not more than 15% with any group
  • Not more than 15% with any sector

Portfolio Mix

  • Target mix of 50:50 between HOLDCO/OPCO transactions
  • Regular cash flows-based transactions

Rating Mix

  • Based on our internal framework
  • Majority portfolio in investment grade

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Disclaimer: Investing Involves Risk. This document is for information purposes only and should not be viewed as a legal offering document or solicitation. Offers to invest in this fund are made only by the Discretionary Portfolio Management Services Agreement. Past performance does not guarantee future results and there is no assurance that the managed accounts will necessarily achieve their objectives. We do not guarantee any returns in the hand of investors not we take any sort of accountability for the performance of the scheme. The above-mentioned data is collected from the respected Fund house please verify the same at SEBI website.