Indian Companies Triumph: Raise a Staggering $6Bn from Private Credit in H1 2024 – EY Report Reveals
Private Credit Deals in India Hit Record $6 Billion in H1 2024
Private credit deals in India have surged 22.4% to an all-time high of $6 billion in the first half of 2024, up from $4.9 billion in the same period of 2023, according to a recent report by EY. Leading the borrowing spree were Reliance Logistics and Warehousing, part of Reliance Industries, and Vedanta Semiconductors, securing $697 million and $301 million respectively from private credit sources.
EY’s analysis highlights a cumulative $20 billion in private credit transactions over the past two and a half years, covering 96 deals. The spike underscores a growing demand for capital in sectors such as real estate, infrastructure, and healthcare, despite a lack of significant private capital expenditure increases.
Domestic funds have driven this rise in private credit, leveraging lower costs and local expertise. Significant deals, including those involving Reliance Logistics, Vedanta Semiconductors, and Matrix Pharma, accounted for $1.3 billion. This shift indicates India’s evolving credit ecosystem, favoring performing credit deals over high-yield alternatives.
"In the face of geopolitical uncertainties, India’s robust economy, stable currency, and strong banking sector make it an appealing investment destination," said Bharat Gupta, Partner, Debt and Special Situations at EY India. Gupta noted that private credit investments are at an unprecedented high, propelled by growth-focused strategies. However, he emphasized the importance of due diligence and effective deal oversight to maximize returns and mitigate risks.
As India’s private credit market matures, there is a movement towards sub-18 per cent Internal Rate of Return transactions. High-yield segments such as mergers and acquisitions, buyouts, and bridge-to-initial-public-offering deals are gaining traction.
EY projects that private credit investments could reach $5-10 billion in the next year, with continued growth in real estate and manufacturing. High-net-worth investors and family offices are increasingly viewing private credit as a lucrative asset class.
Interestingly, the same period saw a 10 per cent decline in total private equity deal value to $17 billion, driven by a 20 per cent year-on-year drop in deal volumes.
First Published: Sep 11, 2024 | 5:22 PM IST
Original Story https://www.business-standard.com/industry/news/indian-cos-raise-6-bn-from-private-credit-in-first-half-2024-ey-report-124091100972_1.html
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