2024-09-07 17:38:43
India’s private credit market showed strong growth in the first half of 2024 (H1 CY2024), with total investments rising to $6 billion, according to an EY report. This performance is a strong indicator of market potential, especially compared to the USD 8.6 billion invested in the calendar year 2023. The impact seen in the first half of the calendar year 2024 has already exceeded the business flow of the year of already, which shows growth. interest and activity in private sector debt.
In addition, the data does not include small businesses of less than 10 million dollars or receiving credit abroad. Taking into account these additional transactions from public sources, they contributed at least $174 million and $1.9 billion, respectively, showing the strong demand of the market.
In terms of contract size, private credit transactions totaling USD 6 billion were recorded in the first half of the calendar year 2024, slightly less than USD 8.6 billion in the calendar year 2023, but exceeding USD 5 .9 billion from the calendar year 2022.
Global funds, which have traditionally played a significant role in the private credit market, contributed 53 percent of total investments during the first half of the calendar year 2024, compared to 63 percent during the previous two years.
This reduction allowed domestic funds to increase their market share, further multiplying the investor base.
Several high-profile businesses are instrumental in driving business value during the first half of calendar year 2024. Notable businesses include Reliance Logistics and Warehousing, which raised $697 million, Vedanta Semiconductors, which raised $301 million, Matrix Pharma , which secured USD 293 million, and GMR Airports, which closed a deal worth USD 271 million. These transactions reflect the growing demand for private credit in high growth sectors.
Almost 60 percent of respondents identified real estate and manufacturing as the sectors driving the greatest flow of business, which is consistent with results from previous surveys.
Capital expenditures (Capex) are seen as the main driver of private credit demand, with 50 percent of finance leaders expecting Capex-related investments to continue to lead the market over the next 12 to 24 months.
Looking ahead, the outlook for India’s private credit market remains strong. Some 58% of fund managers expect private credit investment activity to be between $5 billion and $10 billion over the next 12 months.
This expectation is supplemented by constant demand for credit in sectors such as real estate, manufacturing and capital intensive industries.
However, despite this hope, there are potential risks that need to be looked at. The Reserve Bank of India has expressed concerns over the growing integration between private sector credit, banks and non-banking financial companies (NBFCs), as well as the growing complexity of contractual structures.
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