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The private credit sector is poised for robust growth in India. According to Redd Asia report experts predict a 12 to 25 per cent increase in deal volumes in 2025.
Key drivers include competitive rates, improving corporate balance sheets, and the entry of established asset managers into alternative investment funds (AIFs). Renewable energy, data centres, logistics, and healthcare sectors are expected to present significant opportunities. Indian corporates raised USD 6.77 billion in 2024 through over 230 private credit deals. Market estimates suggest the total for private credit deals, including those by non-banking financial companies (NBFCs), could reach up to USD 10 billion in 2025. This marks an increase compared to USD 7.66 billion raised through 77 deals in 2023. The average deal size in 2024 stood at approximately USD 29 million, with the largest being Varde Partners' USD 500 million investment in foreign currency convertible bonds issued by Reliance Power. Smaller transactions dominated the landscape, with 114 deals falling below USD 10 million. The real estate sector led the way, accounting for 28.3 per cent of total deal volume. Utilities and infrastructure followed with 15.7 per cent and 10.7 per cent, respectively. Other emerging sectors included renewable energy, healthcare, and pharmaceuticals, driven by increased demand for clean energy and health-conscious initiatives. Market participants noted increased sophistication in deal structuring, such as complex high-yield offerings and innovative solutions like zero-coupon non-convertible debentures linked to equity. The private credit market witnessed heightened competition with the entry of NBFCs and family offices. NBFCs refinanced several high-cost deals at lower costs, while family offices increasingly participated in structured credit trades, bypassing traditional fund structures. Domestic private credit funds gained prominence, leveraging local expertise and relationships. This shift highlights the growing confidence of domestic players in attracting both onshore and offshore capital. Concerns were raised about complex private credit deals being sold to retail investors unfamiliar with their risks. Market experts stressed the need for investor education to ensure informed participation. Varde Partners led the market in deal volume with USD 917.1 million, followed by 360 One Credit Funds (USD 723.9 million) and Edelweiss Alternative Asset Advisors (USD 462 million) in 2024. In terms of the number of deals, InCred Alternative Investments topped the list with 49 transactions, albeit with a modest average ticket size of USD 3.3 million. In 2025, the market is eyeing to close multiple high-profile deals, it includes the second USD 500m tranche of the Reliance Capital acquisition fund raise by the Hinduja Group, the USD 3bn fund raise by the Shapoorji Pallonji Group, and the USD 212m planned fundraise by TVS Mobility Group. (ANI)
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