Decoding Private Credit: Risk-Adjusted Returns for Accredited Investors in India

Private credit in India is no longer a niche—it’s a rapidly maturing segment that promises real, risk-adjusted returns. In our latest E.N.G.A.G.E. session, we hosted Dipen Ruparelia, Chief Business and Product Officer at Vivriti Asset Management, to decode this evolving asset class and its suitability for accredited investors. Below is a distilled version of that engaging discussion.

Vivriti’s Niche: Performing Credit for the Mid-Market

Vivriti Asset Management (VAM) is a specialist in private credit, focusing solely on structured debt to mid-sized Indian enterprises. Unlike traditional mutual funds that invest in large-cap, AAA-rated issuers, Vivriti lends to companies with ₹250–₹5,000 crore in revenue—businesses that are EBITDA positive but under-served by banks.

“We don’t touch equities. We do only debt—and we go deep,” said Dipen.

Their edge lies in:

• Origination-first approach (no syndication)

• Rigorous diligence through a 16-member investment and legal team

• Zero default track record across ₹7,000+ crore deployed to date

Why Private Credit Now?

With equity markets hitting valuations highs, Dipen made a compelling case for debt allocation:

1. Predictable Cash Flows: Great for capital stability and retirement-linked goals

2. Superior Risk-Adjusted Returns: BBB-rated companies offer ~15% yields vs. ~8% risk-adjusted government securities

3. Inflation-Adjusted Capital Protection: Crucial for investors planning future expenses (e.g., home purchase, retirement)

4. Post-Tax Efficiency: Especially critical for those in the 30–40% tax bracket

Two Flagship Products by Vivriti

1️⃣ Vivriti Short Term Debt Fund (Category III AIF)

• Type: Open-ended, semi-liquid fund

• Return Target: ~14% gross; 7.3–7.5% post-tax, post-expense

• Taxation: Fund pays tax; returns are tax-free for investors

• Liquidity: Quarterly redemptions; 10% AUM cap per quarter

• Tenure: Perpetual (investors can redeem as needed)

• Ideal for: HNIs wanting regular income, low volatility, and operational simplicity

“Think of this as a smarter alternative to FDs or debt mutual funds—with superior tax-adjusted outcomes,” Dipen noted.

2️⃣ Vivriti Diversified Bond Fund – Series II (Category II AIF)

• Type: Closed-ended, 5-year fund (matures Feb 2029)

• Commitment Raised: ₹1,050+ Cr (target ₹1,500 Cr)

• Return Target: 15–16% gross, with net investor returns at 12.5–13.5% (pre-tax)

• Drawdown Model: 5% upfront, rest called as deals are executed

• Distribution: Quarterly income; principal begins from year 4

• Ideal for: Investors with longer time horizons seeking high-yielding fixed income

Risk Management Approach

Vivriti prides itself on its risk-adjusted return focus, not just absolute yield. Their methods include:

• No exposure to startups, distressed, or equity-linked instruments

• Lending to companies with strong cash flows and operational history

• Diversification: ~25 issuers per fund, average exposure per entity 4–5%

• Custom covenants, collateralized structures, and ongoing monitoring

• Internal IC review of every transaction with multiple risk filters

“Debt isn’t a zero-one game. Even in loss scenarios, we project 10–11% returns,” Dipen explained.

Accredited Investors: Lower Ticket, Higher Access

SEBI’s Accredited Investor framework now allows qualified individuals to invest in AIFs with lower ticket sizes:

• Minimum commitment can drop from ₹1 crore to as low as ₹25 lakh

• Criteria include:

  • ₹7.5 Cr+ net worth, or

  • ₹2 Cr annual income + ₹3.75 Cr financial assets

Vivriti offers full support in getting accredited and onboarding investors efficiently.

How This Compares to Debt Mutual Funds

Parameter	Vivriti AIFs	Debt Mutual Funds
Portfolio	Mid-market private credit	Public market AA/AAA
Yield (Pre-tax)	13–16%	6–7%
Volatility	Low (semi-liquid, structured)	Low
Taxation	AIF Cat III: Tax paid at fund level (investor tax-free)  AIF Cat II: Tax pass-through	Taxed in investor hands
Customization	High (deal structuring, covenants)	None
Liquidity	Cat III: Quarterly	Daily
Minimum Ticket	₹25 lakh (with accreditation)	₹5,000–₹10,000

Final Takeaway

Vivriti is pioneering debt investing in the underserved mid-market, offering products that are:

• Structurally superior to mutual funds

• Tailored for informed, accredited investors

• Backed by robust underwriting and real performance

Whether you’re looking for stable income or aggressive fixed income compounding, Vivriti’s platform makes private credit accessible, transparent, and rewarding.