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Private credit can be $89 billion opportunity in next five years: Report

Stressed asset investment opportunities over next five years, emanating from existing stock of unresolved NPAs, fresh credit defaults, and special situation opportunities can be worth approximately USD 25 billion, the report by consultancy EY said.

November 25, 2021 / 02:21 PM IST
Investors also look to how mainland Chinese markets will react when they will reopen on September 22 after a four-day weekend. (Representative image)

Investors also look to how mainland Chinese markets will react when they will reopen on September 22 after a four-day weekend. (Representative image)

Non-bank lenders and credit funds can invest up to USD 89 billion in performing private credit delivering returns of over 12 per cent, in next five years, a report said on Thursday.

Stressed asset investment opportunities over next five years, emanating from existing stock of unresolved NPAs, fresh credit defaults, and special situation opportunities can be worth approximately USD 25 billion, the report by consultancy EY said.

India offers a large structural opportunity for private credit investors. Post a spate of bad loans, traditional lenders have become risk averse while NBFCs are recovering from a liquidity crisis that engulfed them in 2018. This has left a large void for private credit providers to capture,” its partner Dinkar Venkatasubramanian said.

The EY report defined performing private credit as the one which delivers an internal rate of return between 12-18 per cent per annum, and estimated the overall lending opportunity to be between USD 39-89 billion over the next five years depending on the rate of credit growth.