In 2022, more than half of India’s private credit transactions were carried out by global funds Private credit investments accounted for about $5.3 billion across 77 transactions in India. This trend is likely to remain robust over the next 1-2 years.Half of these deals were under the average ticket size of $40 million, with a fair mix of domestic and global funds participating in deal making during the year. The share of global funds in Indian business transactions stood at 58% in value terms in this period; domestic funds invested 33%. Global-domestic joint investments covered 9%.
With the removal of long-term tax benefits on debt mutual funds, affluent investors are turning to alternative private credit investments to enhance debt portfolio returns.
The market is also seeing many new entrants, such as Carlyle Group and Nippon Life, which are seeking to leverage the credit demand-supply gap.
Canada Pension Plan Investment Board opened its Mumbai office in 2015. Its most recent bets in India include a $205mn investment in industrial property and warehousing developer IndoSpace’s newest real estate fund. Meanwhile, global investor Brookfield has recently ploughed more than $1bn into Indian renewable energy group Avaada to finance its green hydrogen and green ammonia ventures. In 2022, private credit investments represented 12 per cent of India’s $56bn total private equity and venture capital investments, up from 3 per cent in 2021.
Private credit and infrastructure investments across emerging and developing markets surged to record levels in 2022 as borrowers looked for alternative financing options amid rising interest rates.
If you look at what is happening globally, India is in much better condition. Germany is in recession and major banks in the US indicating it will slip in recession. So no major economies apart from India, China and Japan are on the growth path. India is more open to FDI than China and investors are showing interest here. In India, they can expect yields of 18 to 20% in real estate credit in rupee terms and about 16% in non real estate.