True North, one of the oldest private equity (PE) firms in India, has raised Rs. 1,000 crore ($120 million) for its newly launched private credit fund as the asset class continues to gain ground with companies seeking alternative ways to raise capital amid macro market uncertainty.

The firm set up the private credit platform in 2022 with a target to raise Rs 1,000 crore in its Fund – I, the company said in a statement on Monday. The firm expects the fund to be materially oversubscribed when it hits its final closing on December 31, 2023.

True North has already closed eight deals, fully exited one and partially exited another. It is looking to invest in ticket sizes from over Rs 75 crore and up to Rs 200 crore along with its co-investment pools and offers financing solutions to middle market companies at a target IRR of 15-18%.

Volatility in the equity markets, coupled with a high-interest rate environment, is making it difficult for companies in India to raise capital, leading to more asset managers launching credit funds.

Private credit activity in Asia is witnessing strong growth momentum. At least $4 billion in private credit was deployed across select transactions in H1 2023 in India, according to EY. The country saw over $5 billion of private credit investments in 2022.

The private credit sector in India emerging as a fast-growing segment on the back of favourable risk-reward equation and the presence of a good regulatory framework.

Last month, Vivriti Asset Management (VAM), a wholly-owned subsidiary of mid-market lender Vivriti Capital, raised over $204 million across three of its private credit funds, while Singapore-based hedge fund manager RV Capital hit the first close of its maiden India-performing private credit fund, which has a target of $48 million and a green shoe option of $48 million.

Earlier this year, 360 ONE Asset Management, formerly known as IIFL Wealth & Asset Management, raised $258 million for its largest credit fund to date, exceeding its initial target. Later, Centrum Alternatives, an asset manager headquartered in Mumbai, said it was looking to launch its second private credit fund.

In private equity, True North has launched six separate investment funds with a combined corpus of about $3 billion, including co-investments.