India's private credit market sees $6 billion deals in H12024: EY report

Though domestic funds have started to take more interest, in terms of total deals made by global and domestic funds, 58 percent of the transactions involved global funds whereas the remaining 42 percent had domestic funds.

The private credit market in India saw deals worth $6 billion in the first half of the calendar year 2024, according to a report by global consultancy firm EY.

“The first half of 2024 saw 96 deals (deal value being higher than $10 million) aggregating to $6 billion. As compared to this, 2023 saw a total of $8.6 billion,” the report titled Private Credit in India said. The same figure in the corresponding period in H12023 and H12022 was at $4.9 billion and $4.5 billion respectively.

Moreover, the share of global funds and investors in the Indian deal market came down from 63 percent to 58 percent in the current year. This, in turn, made the domestic funds invest more in private deals, with their share standing at 42 percent, it said. “Domestic funds continue to dominate the private deals market due to their local presence, relationships, and market coverage and lower focus by global funds on smaller value deal sizes,” the report said.

Interestingly, in last year’s Private Credit report, EY had said that the interest of foreign capital has been rising in meeting the private credit demand in India but there could be some headwinds in the near term.

“Foreign capital has played an important role in meeting the need of borrowers for private credit in India and resolving the non-performing assets (NPAs) over the last five to six years. We expect the trend to continue on the back of India’s growth story, though higher interest rates may play spoilsport in the near term,” the last year’s report said.

Deal count

In terms of the size of the deals in H1 of 2024, most deals, around 29 percent, were in the $10-20 million range. Around 28 percent of the deals were in the $20-40 million range, and 18 percent in the $40-60 million range. The bigger deals – of more than $120 million value – comprised 11 percent of the total deals.

Sector-wise, real estate had the highest deal share at 27 percent. In H1 of 2023 too, the real estate sector was at the top with around $2 billion of total investment.

Infrastructure was the next best sector in H12024 with a 16 percent deal share. Healthcare and other industrial products each saw 11 percent of deals.

The report showed that investments in Reliance Logistics and Warehouse Holdings Ltd by KKR and ADIA formed the biggest deal at $697 million. Investments worth $301 million in Vedanta Semiconductors by Apollo, Varde, Davidson Kempener, Broadpeak, and Alpha Alts were second highest in the first half of 2024.

H1 2023 deals

In H1 of 2023, the highest investment was in the Shapoorji Pallonji Group by Cerberus Capital Management, Standard Chartered Bank, Deutsche Bank, Varde Partners, Davidson Kempner, Edelweiss Special Opportunities Fund, One Investment Management and Ontario Municipal Employees' Retirement System and Synergy Capital. The size of the investment was $1.7 billion. JP Morgan and Oaktree Capital Management’s investment in Vedanta was the second highest in H12023 at $850 million.