Sundaram Alternates exits Second Realty Fund with 17% IRR, platform delivers over 40 exits in 8 years

Sundaram Alternates (SA), the alternative investment arm of Sundaram Finance Group, announced the successful closure of its second real estate credit fund, Sundaram Alternative Opportunities Series, High Yield Secured RE Debt Fund II (SA RE Credit Fund II). 

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The firm said that the fund delivered a gross investor IRR of 17% post exiting its portfolio investments in its ~Rs 435 crore SA RE Credit Fund II.

SA RE Credit Fund II invested a 100% of its portfolio in fully secured, high-yielding debentures issued by Indian real estate developers. The fund’s strategy was focused on projects in key South Indian micro markets.

SA said the fund followed a disciplined credit approach by diversifying capital allocation, pursuing risk-adjusted underwriting, and backing de-risked brownfield projects with consistent sponsor commitments of more than 15%. The fund reported zero capital losses even during challenging cycles between 2019 and 2023, including the COVID-19 pandemic.

The successful exit adds to Sundaram Alternates’ track record in real estate credit. Over the past eight years, the platform has completed 38 full exits and more than 10 partial exits, aggregating to about ₹2,600 crore.

SA said it has executed more than 70 deals across four real estate credit funds while navigating disruptions such as the NBFC liquidity crisis and the pandemic. The current SA RE credit portfolio generates an annual cash yield of 15-16% and has maintained uninterrupted quarterly income distributions since inception, the firm said.

“The successful closure and exit of SA RE Credit Fund II underscores our commitment to delivering strong risk-adjusted returns while prioritizing capital protection. Our disciplined investment approach and unique underwriting methodology have enabled investors to achieve consistent, quarterly cash yields even during challenging market conditions,” said Karthik Athreya, Director at Sundaram Alternates.

To date, SA has deployed over Rs 4,200 crore across 74 deals with contracted IRRs of 19%. Overall, the broader alternative investments platform at Sundaram manages more than Rs 7000 crore in cumulative AUM across private credit, liquid fixed income and bespoke equity strategies.