Private credit deals to touch $10 billion in 2024, says EY report

Private credit deployments are likely to surpass the $10 billion mark in 2024, a report by a consultancy firm EY said on Wednesday. The January-June period saw private credit transactions of over $6 billion in 96 deals, and the last two-and-a-half years have seen over $20 billion being deployed in the emerging alternative serving the credit needs of Indian companies.

Major deals were witnessed across real estate, infrastructure, and healthcare sectors in the first half of the year, the report by EY said. Domestic funds are gaining traction and market share in the private credit space leveraging local expertise and the influence of lower-cost domestic money, it said.

The first half of the year saw Reliance Logistics and Warehousing, Vedanta Semiconductors, and Matrix Pharma collectively raising approximately $1.3 billion, while real estate sector continued to be a focal point with borrowers such as Prestige Group, Puravankara Group, Kalpataru Group, and Shapoorji Group being active.

The firm's partner Bharat Gupta said private credit investments are at an all-time high, driven largely by growth-oriented strategies. "The outlook remains promising, though thorough due diligence and effective deal oversight are crucial to maximizing returns and managing potential risks," Gupta added.

With the maturing of the system, there is a subtle shift towards performing credit deals in India with funds increasingly engaging in sub-18% Internal Rate of Return (IRR) transactions, the report said. In the high-yield segment, mergers and acquisitions/buyout deals, and bridge-to-initial public offering transactions have gained traction within private credit funding, it said.

High-net-worth investors and family offices are increasingly participating in private credit as a key asset class, boosting the popularity of domestic funds, it added.