India’s private credit market is off to a busy start of the year with two firms planning new funds that combined would top $1 billion, as they seek to tap demand from investors for high-yielding debt.
Neo Asset Management, founded in 2021 and backed by venture company Peak XV Partners as well as Japanese financial group MUFG, aims to raise as much as 60 billion rupees ($699 million) for its second private credit fund, according to people familiar with the matter.
Meanwhile, 25 year-old Mumbai-based Avendus PE Investment Advisors is launching a third private credit fund to raise as much as 40 billion rupees, Anshul Jain, executive director for Avendus Structured Credit Funds, told reporters.
Private credit is growing in India alongside Prime Minister Narendra Modi’s plans for infrastructure projects, which have created a need for middle-market funding for everything from solar power to roads. A report last year by consulting firm Ernst & Young LLP said that deals in the country could total $10 billion by the end of 2024.
“This asset class is bridging a critical financing gap which existed between traditional debt and equity, making it one of the fastest growing,” Nilesh Dhedhi, managing director at Avendus Finance Pvt. said at the event.
Both Avendus and Neo plan to finance mid-sized companies, with the former focusing on sectors such as pharmaceuticals, manufacturing, chemicals, healthcare and technology sectors. Neo hopes to wrap up the entire fundraising in the next 18 months, which could be more than double its predecessor if the targeted amount winds up being raised.
