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Private Credit Investments In India Hit All-Time High at $5.1 Billion in 63 Deals: Report

Private Credit investments in India have reached a record high of 16 per cent of total alternative investments in 2023H1 from 5 per cent in 2018

Private Credit Investments In India Hit All-Time High at $5.1 Billion in 63 Deals: Report
POSTED ON December 07, 2023 3:09 PM

The first half of 2023 has been the best period for private credit investments in India so far. A report by Praxis Global Alliance and IVCA revealed that $5.1 billion was invested in 63 deals during this time.  

The report titled 'Unlocking Opportunities: India’s Private Credit Landscape' shows strong growth in India's private credit investment system. In the first half of 2023, it made up 16 percent of all alternative investments. 

This shows a peak in the path of Indian private credit, emphasising its crucial role in meeting the country's credit needs. The report also makes interesting comparisons between private credit trends in India and around the world, The release issued by the firms added.  

The economy has shown resilience amid worsening global macro conditions and has emerged as one of the most promising markets for investors, the report noted.  

The report emphasises that companies require private credit in six situations: when facing restrictions on bank loans, in need of flexible financing, for the project and revenue-based financing, when owners wish to avoid equity dilution, and for companies with lower credit ratings.   

It also gives insights from around 20 Private Credit investors providing a  comprehensive view of the ecosystem’s evolution, changes across deal-making, fundraising, and exits as well as their overall outlook for the future.  

Madhur Singhal, managing partner and CEO, Praxis Global Alliance, stated, “At Praxis, we expect Private Credit AUM in India to reach $ 60-70 billion (4x of $  15 billion in 2022) by 2028. Investors remain bullish on the India growth story with LP allocations to Private Credit in India expected to increase in 2024 and beyond. The government has also supported the Private Credit industry through progressive investor-friendly regulations.”   

Rajat Tandon, president of IVCA, said, “2023 marks a pivotal moment for India's Private Credit landscape amidst global challenges. With resilience, our nation has become a beacon for investors, attracting $ 5.1 billion in 63 deals during H1 2023. This report reflects the sector's evolution, emphasizing its vital role in India's growth story. Private Credit, constituting 16 per cent of total private investments, is set to drive the next phase. This report invites stakeholders to join the dialogue shaping India's thriving Private Credit ecosystem."   

“Private Credit in India is a large structural opportunity. As India grows to a $ 7.5T economy over the next decade, we see a $ 100 billion opportunity for private credit managers. Private Credit strategies can the ability to deliver attractive returns across the risk spectrum, resulting in increasing interest from domestic and offshore investors alike. A local presence with a thorough understanding of the Indian market dynamics as well as legal and regulatory landscape are critical for success in this space,” said Venkat Ramaswamy, vice chairman, Edelweiss Financial Services    

Interest in India's private credit is on the rise among both domestic and foreign LPs, driven by the reduced attractiveness of debt MFs after the removal of tax advantages, emerging market growth story, ability to generate attractive returns, and introduction of creditor-friendly regulations, the report added.  

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