The credit arm of Olympus Capital Asia and Kilimanjaro Advisors have agreed to provide structured debt financing to Atria Convergence Technologies, an Indian internet service provider, according to a statement. Atria is majority owned by private equity firm India Value Fund Advisors.
The financial details of the deal were not disclosed but the statement said funding will allow Atria to consolidate its business and to continue growing.
The firms could not be reached for comment by press time.
“[Atria] has executed its plan very well over the past few years to become a leading market player in its core areas. We are very pleased to support [Atria] with its growth strategy to further develop the internet broadband infrastructure in the country,” Nitish Agarwal, chief investment officer of Olympus’ credit fund, said in a statement.
Increasingly, opportunities are opening in India’s debt sector as banks pull back on lending and companies fail to repay their debt. Moreover, private equity firms like investing in debt opportunities as they offer more security of exit and return, in comparison to equity investments.
Earlier this month, Kohlberg Kravis Roberts invested $100 million in Indian conglomerate Avantha Group from its non-banking financial company, a vehicle set up in India to invest in Indian businesses struggling to pay heavy debt burdens stemming from the boom years.
India's slowing GDP growth over the last few years has made the environment more difficult for companies with debt, industry sources say.
In October, KKR also invested about $90 million in hospital chain Apollo Hospitals, subscribing to convertible debentures issued by Apollo’s’ parent company. KKR has the option to convert the debentures into equity shares in Apollo Hospitals at the end of five years, with the founders holding the right to buy back these instruments after two years, PEI reported earlier.
The Artia deal is Olympus’ first credit investment in India.
The firm launched its credit unit, Olympus Capital Asia Credit in March last year, which aimed to provide mid-market companies with alternative financing when they are under served by banks and don’t want to dilute their equity.
The vehicle typically provides structured loans of $20 to $100 million, with two to three year maturities, and focuses on Southeast Asia, India, Australia, and North Asia on an opportunistic basis.
“Many of the loans in our pipeline involve business owners who have determined that their growth capital needs are better met through structured, two- to three-year credit rather than facing significant dilution from private equity,” Olympus' Agarwal, said in an earlier statement.