Archive · 27 Jul 2025
Global Investors Cautious on India's Private Credit Market
Imagine you have money to lend to companies (private credit).
Big investors like pension funds are a bit cautious about lending in India.
The process of getting their money back if a company struggles is tricky, and the returns aren't as good as in places like the US or Europe.
Deals are often small, which doesn't interest the biggest investors.
Some investors are working with local partners to navigate this, and others focus on specific cases where companies are having trouble.
Direct lending is the most popular type of private credit in India.
Global investors, particularly pension funds, are hesitant to invest in India's private credit market due to complex debt resolution processes.
Large global funds find the deal sizes in India's private credit market too small to be worthwhile.
Returns in India's private credit market have become less competitive compared to developed markets.
Some global investors are partnering with local firms for private debt investments in India.
Direct lending held the largest share in India’s private credit market in 2024, accounting for over $150 billion.
- Who
- Pension funds, global PE funds, and other global investors
- What
- Global investors are cautious about India's private credit market.
- When
- The article discusses the current state of the private credit market.
- Where
- India
- Why
- Due to complex debt resolution, small deal sizes, and less competitive returns.
Optimistic View
Cautious View
Market outlook
Optimistic View
Private credit market in India will mature and offer opportunities with the right risk-reward balance.
Cautious View
More cautious approach, particularly for pension funds
- Direct lending share (2024)
- Over 75% of total capital raised
- Direct lending capital raised (2024)
- Over $150 billion
- Special situations capital raised
- Close to $25 billion
- Current return rates
- 10-11% for large companies
- Average deal size
- Rs 200–300 crore