India emerges as APAC's largest private debt market
India has emerged as Asia Pacific’s largest private debt market, according to a Preqin report and industry experts predict the South Asian nation could account for up to 30% of private credit fundraising by the end of 2025.
India-focused private debt funds’ assets under management (AUM) grew by 26 times to $17.8 billion in 2023 from less than a billion dollars in 2010, the report titled Preqin Territory Guide: Private capital in India 2024.
India is now a regional leader in private debt – which refers broadly to non-bank lending or funding -- with AUM higher than each individual market in Asia Pacific, according to the report.
“India’s strong economic growth is creating ample opportunities for private debt, both on the supply and on the demand side with increasing foreign and domestic capital meeting the financing requirements of companies and owners who are expanding both organically and inorganically,” Anshul Gupta, head of loans and specialised finance, ASEAN and India at BNP Paribas, told AsianInvestor.
FLEXIBLE FINANCING
Alongside the need for flexible financing, the introduction of regulatory reforms such as the Insolvency and Bankruptcy Code by the Indian government has also increased investor confidence in the private debt market.
BNP Paribas
"Private debt often offers more flexibility on financing terms and end use making it well suited for bespoke and event driven situations,” noted Gupta.
“This is even more relevant in the small and medium enterprise space where traditional bank appetite is more limited.”
There are currently 44 India focused private debt funds in market, with an aggregate capital target of $10billion – significantly higher than any other market in APAC, according to Preqin.
Non-bank financial companies have also become critical players in India’s credit ecosystem and offer a wide range of private debt products catering to different sectors, said David Gibson-Moore, president and CEO of Gulf Analytica, a Dubai-based corporate advisory firm for institutions and family offices.
Private debt funds, and even more broadly alternative investment funds, have also become increasingly popular with family offices, alongside international institutional investors.
OPPORTUNITIES GALORE
“India’s rapid urbanisation is driving the need for both commercial and residential development which represents significant opportunities for debt financing, particularly in India’s Tier 1 and Tier 2 cities,” Gibson-Moore told AsianInvestor.
Infrastructure is another high-demand sector, given the Indian government’s ambitious projects aimed at improving transportation, renewable energy and urban utilities.
Gulf Analytica
“These projects are long-term in nature and offer stable, predictable returns making them a popular target for private debt investors,” added Gibson Moore.
As Indian corporations look to restructure and reduce debt loads, private debt investors are also stepping in to provide capital.
“This trend is especially pronounced in sectors like real estate, manufacturing, and energy where capital-intensive projects require significant funding that traditional lenders might well avoid," he said.
Fintech and consumer financing are also flourishing in India, opening up opportunities for private debt players.
BOTH LOCAL AND GLOBAL
Local alternatives managers such as Edelweiss Alternatives, Kotak Alternative Asset Managers, O Neil Capital Management and 360 ONE are among the top private debt fund players in India, according to Preqin.
Among international players, Brookfield Asset Management is a key private debt player in infrastructure, while Avenue Capital Group and Oaktree Capital provide private debt to companies undergoing restructuring or requiring alternative financing solutions.
The outlook for 2025 remains bright. “We expect 2025 to be another year of strong growth in private debt in India with real estate, infra and financial services being particular bright spots,” said BNP Paribas’s Gupta.
Gibson also noted that estimates suggest by the end of 2025, India’s private debt market could account for nearly 30% of the total private credit raised in the APAC region.
“These dynamics make India a leading market for private debt investors providing both yield and long-term growth opportunities.”