Mumbai: Trifecta Capital is planning to raise a quarter of its upcoming second venture debt fund of 750 crore from overseas investors, said a senior executive. The fund, India’s first homegrown venture debt provider, will raise the money from institutional investors and family offices next year.

“We will look for capital from near-shore countries such as Singapore, China, Hong Kong and the Middle East," said Rahul Khanna, co-founder and managing partner, Trifecta Capital. “Venture funding is a global business and when our investee companies go global, we want to have the ability to help them with both dollar and rupee funding", he added.

Trifecta is currently raising funds from limited partners (LPs) for its 750 crore Fund II, of which it expects to achieve a first close of 250 crore by the end of the year, said Khanna.

While it currently has only domestic LPs—largely institutional banks, insurance companies, development finance institutions and family offices—in the second fund, it is aiming for a quarter of the corpus to be raised abroad.

“A 75:25 mix in favour of domestic capital is what we’re looking for," Khanna said. Trifecta could raise up to 200 crore from foreign investors if the 75:25 ratio were to be maintained. Trifecta’s portfolio includes online grocer BigBasket (Supermarket Grocery Supplies Pvt. Ltd), logistics firm Rivigo (Rivigo Servies Pvt. Ltd) and beverage brand Paper Boat (Hector Beverages Pvt. Ltd). Trifecta plans to make 15-20 investments next year, its strategy being to follow venture capital funds with a time lag of 12-24 months, said Khanna.

“We would look to make investments where VCs have invested in the last one-two years and have seen successes," he added.

Food, education, health, energy and transport are some of the focus sectors, driven by Trifecta’s objective of “building for Bharat", which refers to products and services most needed by Tier 2 and Tier 3 cities, which comprise a large underserved market, Khanna said.

Trifecta was started in 2014 by Khanna and Nilesh Kothari, who was consulting firm Accenture’s managing director (MD) of ventures and acquisitions. Khanna was MD of early stage investor Canaan Partners’ India arm. It raised 500 crore for its first fund, which has been fully invested.

Venture debt as an investment option has seen significant traction in the last few years, with the rise of a few key players such as Trifecta, Alteria Capital and InnoVen Capital. Alteria, started by Ajay Hattangdi and Vinod Murali, former executives of Temasek-backed InnoVen Capital, is currently raising a 1,000 crore venture debt fund.

Mint reported on 4 October that Alteria made a second close of 625 crore for the fund. “The entry of so many players is validation that this (venture debt) is a good business to be in. If we were the only ones in the business, I would be worried," said Khanna.

Venture capital funds have also explored the venture debt option. Early-stage investor Unicorn India Ventures is raising a 600 crore venture debt fund, for which it has reportedly received soft commitments of 200 crore.

IvyCap Ventures, also an early and growth stage investor, received the regulator’s approval last month for a ₹500 crore venture debt fund.

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