In this episode of, ‘Big Deal’, the industry players — Kapil Singhal of True North; Amit Agarwal of Edelweiss Alternatives; and Piyush Gupta of Investec Capital — deep dive into the dynamics of private credit space. This space is gaining momentum with more demand for the structured, differentiated loan as more and more players enter the space to solve for the gap left by the banks and NBFCs.

Piyush Gupta kicked off the discussion by shedding light on the global rise of the private credit asset class. He mentioned that globally, the private trade asset class surged post the global financial crisis due to stricter bank regulations and capital requirements for mid-market lending. This trend was mirrored in India, especially after 2013-14 when NPAs became a concern.

During this time, NBFCs took over market share in various sectors. However, following the IL&FS events in 2018, wholesale lending NBFCs had to step back, along with a significant drop in credit mutual fund AUM, leaving a void in the market once occupied by banks, NBFCs, and credit funds.

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Kapil Singhal weighed in on the international aspect of private credit, emphasising that offshore interest in India may be somewhat subdued in the short term.

He said, “For some time to come, offshore interest will be subdued from a tactical basis. People will still invest in India and offshore basis will be more long-term strategic relationships. So, they will continue to come to India. But the immediate trading kind of trade-off that I want to earn slightly higher returns and invest in India will be limited for some time. But as the rates cool off, and surely they will in a matter of maybe two years, two and a half years, whatever time it takes you offshore interests will come back again.”

For the entire discussion, watch the accompanying video