JM Financial launches distressed opportunities fund

JM Financial has launched a distressed opportunities fund to take advantage of the crisis in the economy due to the coronavirus-induced lockdown. The company on Thursday announced the closure of the corpus of the first fund by tying up for Rs 160 crore, which will be scaled up to Rs 500 crore as the opportunities come by.

The group is expecting many cheap assets to come to the market looking for buyers or investors as it sees the number of companies going belly up is growing faster once the lockdown is fully lifted. Various analysts see bad loans to spike considerably to over Rs 5 lakh crore once the six-month moratorium ends by the end of August as they see recovery to be delayed beyond 2022-23.

"JM Financial Credit Alternatives, the credit alternatives arm of the group, has closed the JM Financial yield enhancer (distressed opportunity) fund I with commitments for Rs 160 crore from HNIs (high networth individuals), family offices and institutions," the company said in a statement on Thursday. This is the maiden fund from this series.

The Category-II alternative investment fund was set up in July last year after receiving approval from markets watchdog Sebi. The company plans to take the corpus of this sector-agnostic fund to Rs 500 crore later depending on the evolving opportunities, sources said adding that the fund will invest to build a portfolio with downside protection.