CIO Speak: Private credit’s rapid boom

India’s private credit market is now nearing a milestone - the country is expected to see around USD 10 billion in transactions in CY2024 alone. As India embarks upon an accelerated expansion journey, both private and public sector enterprises, in an attempt to harness the prevailing opportunities, will seek access to well-priced capital. 

This is already evident from the credit growth in the economy which is currently close to a decadal peak – the overall bank credit growth in India stood at ~11% for the period from November 2023 to June 20241. And this is where debt, or more specifically private credit, will play a catalytic role. In the backdrop of such a landscape, fixed income solutions have the ability to add value across the risk-return curve.

Highlights

• India’s private credit market – Assets Under Management (AUM) of India focused
  private debt funds has grown almost 25x from USD 0.7 billion in 2010 to USD 17.8 billion in 2023.
• Further, the first 6 months of 2024 turned out to be the best 6 months for India’s private credit market with private credit deals in H1 2024 soaring to an all-time high (for any six-month period) of USD 6 billion, deployed across 96 deals and dominated by sectors like real estate, infrastructure, and healthcare.
• Many mutual funds are launching their own performing credit funds under the AIF structure while correspondingly, some borrowers are also structuring their own AIFs to provide an alternative source of financing for their business.
• As an investor, you can leverage private credit investment opportunities for portfolio diversification, downside protection, and higher yields.