Comparing the first half of 2024 to the same period in calendar 2023, private credit deals in India increased by 22.4 percent to an all-time high of $6 billion. Deals of $4.9 billion were reported during that same period. The two biggest recipients of private finance were Vedanta Semiconductors and Reliance Industries’ subsidiary Reliance Logistics and Warehousing.
According to international consulting firm EY, Vedanta raised $301 million, while Reliance Logistics topped the league table with $697 million in private loans.
Private credit transactions have exceeded $20 billion over the last 2.5 years, distributed across 96 deals. This notable rise demonstrates the growing need for finance, particularly in industries like infrastructure, healthcare, and real estate. According to the EY analysis, this trend is happening even if private capital expenditure hasn’t increased all that much yet.
Domestic funds are a major factor driving the rising activity in private finance as they take advantage of cheaper costs and local knowledge. $1.3 billion was exchanged in significant deals including Reliance Logistics, Vedanta Semiconductors, and Matrix Pharma, the newspaper stated. According to the report, this represents a change in the industry as India’s developing credit ecosystem rewards successful credit arrangements over high-yield options.
Private equity entails investing in private enterprises through the purchase of shares, whereas private credit concentrates on lending to businesses, offering debt funding at a higher interest rate instead of taking ownership.
According to Bharat Gupta, Partner, Debt and Special Situations, EY India, “India’s robust economy, stable currency, and strong banking sector stand out, making the country an attractive investment destination” in the face of geopolitical worries. “Growth-oriented tactics are primarily responsible for the all-time high in private credit investments. The future seems bright, but maximizing gains and minimizing risks require careful due diligence and efficient deal supervision.”
An understated trend toward executing credit deals in India is evident as the country’s private credit ecosystem develops, with funds doing more and more transactions with internal rates of return below 18%. The research states that bridge-to-IPO transactions and mergers and acquisitions/buyout arrangements have gained traction in the high-yield area of private credit funding.
According to a survey by EY, private credit investments may amount to $5–10 billion over the course of the next year, with real estate and manufacturing projected to see the most development. Private credit is becoming more and more attractive to high-net-worth individuals and family offices, which is propelling the market ahead.
Although chances for investments driven by stress have decreased due to greatly enhanced credit discipline, robust corporate balance sheets are creating new options for collaboration in acquisition and capital expenditure-led finance. According to Dinkar Venkatasubramanian, Partner, Head of Debt and Special Situations, EY India, “Indian private credit continues to thrive, with robust fund-raising and active registration of new funds.”
Interestingly, during the same period (the first half of calendar 2024), the total value of private equity agreements declined by 10% to $17 billion. This loss was mainly caused by a 20% year-over-year decline in deal volumes, with 65 deals reported in the first half of 2024.