Domestic alternative investment funds (AIFs) are expanding their footprint in India’s private credit market, traditionally dominated by global fund managers, according to a report by consultancy firm EY.
Key Insights from the EY Report:
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Rising Market Share: Domestic private credit funds now account for approximately 30–35% of the total private credit deal volume in India, up significantly from under 15% five years ago.
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Capital Deployment Focus: Local funds are actively stepping in to fulfill intermediate growth capital and performancerelated credit needs across mid-market corporates, real estate developers, and infrastructure projects where traditional banks face regulatory constraints.
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Flexible Deal Structures: Domestic fund managers are offering tailored capital solutions—including mezzanine debt, structured high-yield paper, and holding company financing—allowing local promoters to raise funds without diluting equity stakes.
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Evolving Investor Base: Increased participation from domestic ultra-high-net-worth individuals (UHNWIs), family offices, and institutional investors seeking predictable, inflation-beating yields has expanded the domestic pool of private credit capital.
The growth of local private credit funds provides Indian businesses with a resilient alternative source of capital, reducing dependence on global capital flows subject to foreign exchange fluctuations and international market volatility.
