How the 360 ONE ARISE Credit Fund Targets 13–14% Returns with Asset-Backed Credit

How the 360 ONE ARISE Credit Fund Targets 13–14% Returns with Asset-Backed Credit

For many investors, generating attractive returns from fixed-income investments has become increasingly difficult. Traditional options such as fixed deposits, government securities, and high-quality bonds often struggle to deliver returns that comfortably outpace inflation. As a result, sophisticated investors are exploring alternative asset classes that offer stronger income potential while maintaining a focus on capital preservation.

One such opportunity is the 360 ONE ARISE Credit Fund, a Category II Alternative Investment Fund (AIF) that focuses on secured private credit transactions. The fund aims to generate a gross Internal Rate of Return (IRR) of approximately 13–14% through investments in performing credit opportunities backed by strong collateral and established businesses.

What makes this fund particularly interesting is its combination of asset-backed lending, a fully identified portfolio, short-duration exposure, and institutional-grade underwriting. Rather than taking equity-like risks, the fund seeks to generate returns through carefully structured credit investments that prioritize downside protection.

A Quick Overview of the 360 ONE ARISE Credit Fund

The 360 ONE ARISE Credit Fund is a close-ended Category II AIF that primarily invests in performing private credit opportunities.

Fund Snapshot

*Returns are indicative and not guaranteed.

Unlike many alternative investment funds that operate as blind pools, the ARISE Credit Fund provides visibility into its investment portfolio from the outset. Consequently, investors gain greater clarity on how their capital is expected to be deployed.

Understanding the Investment Thesis

At its core, the investment thesis is relatively simple. The fund lends capital to established businesses that require flexible financing while ensuring strong security structures protect investor capital.

However, executing this strategy successfully requires deep expertise in credit underwriting, transaction structuring, and risk management.

The fund focuses on opportunities such as:

• Acquisition financing
• Growth capital financing
• Pre-IPO financing
• Private equity exit financing
• Promoter financing
• HoldCo financing

Importantly, the strategy avoids venture debt, distressed assets, unsecured lending, and speculative early-stage businesses.

As a result, the portfolio remains focused on companies with:

• Proven operating histories
• Strong business models
• Predictable cash flows
• Meaningful collateral support
• Clear repayment visibility

This disciplined approach seeks to strike a balance between attractive returns and prudent risk management.

Why Private Credit Is Gaining Popularity

Private credit has emerged as one of the fastest-growing segments within alternative investments globally and in India.

Traditionally, businesses relied heavily on banks for financing. Today, however, many companies require customized funding solutions that traditional lenders may not always provide efficiently.

Private credit managers fill this gap by offering structured financing solutions tailored to specific business needs.

As a result, investors can potentially earn higher yields than traditional debt instruments while benefiting from stronger contractual protections and collateral packages.

Furthermore, private credit investments often exhibit lower correlation with public equity and bond markets, making them useful diversification tools within a broader investment portfolio.

Why Asset-Backed Credit Matters

One of the strongest features of the 360 ONE ARISE Credit Fund is its emphasis on asset-backed lending.

In credit investing, protecting capital is often more important than maximizing returns. While equity investors focus on upside potential, credit investors typically prioritize repayment certainty.

Therefore, the fund structures every investment with meaningful security coverage.

Collateral may include:

• Listed shares
• Real estate assets
• Operating business assets
• REIT units
• Cash-flow assignments
• Personal guarantees from promoters

Many transactions target security coverage ranging between two and three times the amount invested.

Consequently, investors benefit from multiple layers of protection if business performance weakens or repayment challenges emerge.

How the Fund Targets 13–14% Returns

The fund’s target return of 13–14% gross IRR comes from a combination of coupon income, accrual strategies, and structured repayment mechanisms.

Unlike publicly traded debt securities, private credit transactions are negotiated directly with borrowers. Therefore, lenders can often command higher yields in exchange for providing customized financing solutions.

Additionally, these transactions typically involve more complex structuring, stronger covenants, and enhanced collateral packages.

The fund’s indicative portfolio carries a weighted average yield to maturity of approximately 14%, which aligns closely with its target return range.

Nevertheless, investors should remember that these returns remain indicative and are not assured.

Fully Identified Portfolio: A Key Differentiator

Many alternative funds raise investor capital before identifying investment opportunities. Consequently, investors assume deployment risk and often face uncertainty regarding portfolio composition.

The ARISE Credit Fund takes a different approach.

The fund offers a fully identified portfolio at launch, allowing investors to evaluate potential opportunities before committing capital.

This structure provides several advantages:

• Greater transparency
• Better visibility on expected returns
• Reduced deployment risk
• Immediate capital utilization
• Lower cash drag

Moreover, the fund intends to deploy 100% of investor capital from day one, which can improve return efficiency over the life of the fund.

Examples of Portfolio Opportunities

The fund’s indicative portfolio includes investments across multiple sectors and financing structures.

Project Rhodium

This investment involves financing backed by large insurance businesses. The transaction benefits from substantial collateral support and security coverage of approximately 2.7x.

Project Excel

This opportunity is supported by REIT-backed assets and associated cash-flow distributions. The structure includes collateral coverage of approximately 1.6x.

Project Lincoln

This acquisition financing transaction benefits from multiple layers of security, including listed shares and real estate assets. Overall collateral coverage is approximately 1.75x.

These examples demonstrate how the fund combines attractive yield opportunities with structured downside protection.

Comparing the Fund with Traditional Fixed-Income Investments

Investors often compare private credit funds with more familiar fixed-income options.

While the fund offers higher return potential, investors must accept lower liquidity and a longer investment horizon.

Risk Management and Underwriting Discipline

Strong underwriting is the foundation of any successful private credit strategy.

To manage risk, 360 ONE follows a proprietary framework based on five key principles:

Character

The investment team evaluates promoter quality, governance standards, and repayment track records.

Collateral

Every transaction requires meaningful security coverage.

Cash Flow

The fund invests only in businesses capable of generating sustainable cash flows.

Covenants

Strong contractual protections help safeguard investor interests.

Control and Corrective Action

The team actively monitors investments and retains the ability to intervene when risks emerge.

Furthermore, the fund excludes several higher-risk categories such as venture debt, distressed funding, and unsecured transactions.

Why the 360 ONE Platform Matters

The fund benefits significantly from the broader 360 ONE private credit platform.

The platform manages approximately ₹16,000 crore in private credit assets and has deployed more than ₹22,000 crore across multiple investment cycles.

This scale creates several advantages:

• Access to proprietary deal flow
• Strong promoter relationships
• Deep structuring expertise
• Comprehensive due diligence capabilities
• Active portfolio monitoring

Moreover, the investment team brings decades of combined experience across private credit, corporate lending, structured finance, and investment banking.

As a result, investors gain access to institutional-quality opportunities that may not be available through traditional investment channels.

Fees and Other Considerations

Before investing, prospective investors should carefully review the fund’s Private Placement Memorandum.

In particular, investors should understand:

• Management fees
• Performance fees
• Hurdle rates
• Fund expenses
• Tax implications
• Distribution policies
• Exit provisions

Since the advertised return target is a gross figure, understanding the fee structure is essential when estimating potential net returns.

Benchmarking Returns

Investors should also compare the fund’s return objectives against broader industry benchmarks.

The CRISIL AIF Benchmarks provide useful performance data across alternative investment fund categories and can help investors evaluate private credit strategies within a broader market context.

Benchmarking expectations against independent data sources is an important part of any investment due diligence process.

Who Should Consider This Fund?

The 360 ONE ARISE Credit Fund may be suitable for:

• High-net-worth individuals
• Family offices
• Sophisticated investors
• Investors seeking alternatives to traditional debt products
• Investors looking for portfolio diversification
• Investors comfortable with a four-year investment horizon

However, investors requiring regular liquidity may find the structure less suitable.

Key Risks Investors Should Understand

Although the fund incorporates multiple layers of downside protection, no investment is risk-free.

Key risks include:

• Credit risk
• Liquidity risk
• Refinancing risk
• Regulatory risk
• Market risk
• Concentration risk

Therefore, investors should assess how private credit fits within their overall asset allocation strategy before investing.

Frequently Asked Questions

Final Verdict

Ultimately, the 360 ONE ARISE Credit Fund offers a differentiated private credit opportunity for investors seeking enhanced income without taking on the full volatility associated with equity markets.

Its combination of secured lending, asset-backed structures, a fully identified portfolio, short-duration exposure, and institutional underwriting standards creates a compelling investment proposition.

While the fund is not suitable for every investor, it may appeal to those seeking portfolio diversification, stronger yield potential, and structured downside protection.

As always, investors should review the fund documentation carefully, understand the associated risks and fees, and consult a qualified financial advisor before making an investment decision.

Download the strategy presentation and connect with our team for a personalised portfolio review.