Archive · 1 Oct 2026
Private Credit Offers High Returns With Significant Risks
Private credit means lending money directly to companies instead of only using banks.
Companies may use it when they need a loan designed for their specific situation.
The returns can be higher than ordinary lending, but higher returns usually mean higher risks.
Loans to healthy companies are generally less risky than loans to startups or financially troubled companies.
Lenders study a company’s cash flow to see whether it can repay the money.
They also examine whether the company’s owners have treated other lenders and business partners honestly.
Assets such as land, equipment, or shares may provide protection if repayment problems occur.
Investors should understand that their money may be unavailable for several years.
Shantanu Sahai says investors should focus on the risk they can accept before looking at the possible return.
Private credit provides customized loans to companies, with stated yields ranging from about 13% to 30%.
Performing credit typically returns 13%-17%, venture debt 17%-20%, and distressed debt 22%-30%.
Lenders assess both a company’s ability to repay and its promoters’ willingness to honor commitments.
Loans may be backed by assets such as land, machinery, or shares, but security is valuable only if it can be accessed and sold.
Investors may need to lock away funds for three to four years, with private credit suggested at roughly 10%-15% of an overall portfolio.
- Who
- Shantanu Sahai, CEO of ASK Private Credit, discusses private credit for companies and investors.
- What
- The interview explains how private credit works, its return ranges, lending risks, due diligence, and portfolio suitability.
- Where
- The discussion concerns private credit in India and lending to Indian companies.
- Why
- Private credit is presented as an alternative source of customized corporate capital and a potential portfolio-diversification avenue for investors.
- Return range
- Private-credit yields can range from approximately 13% to 30%.
- Performing credit
- Generally involves profitable companies and may return about 13%-17%.
- Venture debt
- Typically finances newer or unprofitable but fundamentally viable businesses, with returns of about 17%-20%.
- Distressed debt
- Involves financially stressed companies and may offer expected returns of about 22%-30%.
- Approval process
- ASK Private Credit takes an average of around three months to approve a corporate transaction.
- Typical loan tenure
- Individual loans have an average tenure of around three years.
- Suggested allocation
- Sahai broadly suggests private credit account for 10%-15% of an overall portfolio, subject to liquidity needs.
- Liquidity
- Investors should generally be prepared to lock away funds for three to four years.