Private credit investments rose 35% in 2025 on policy rate expectations, unmet demand

Deployments by private credit firms rose 35% year-on-year(y-o-y) to $12.4 billion in the calendar year 2025, aided by stable interest rate expectations and structural funding gaps left by banks, particularly in real estate and healthcare sectors.

Specifically, private credit investments in India touched $9 billion in the first half of 2025 and reached $3.4 billion in the second half, a recent report by EY showed. The July-December period recorded 87 private credit deals above $10 million. Over the same period, deals exceeding $100 million represented 9% of total deal count, and nearly 36% of aggregate deal value.

More than 35% of capital deployed in July-December was allocated towards refinancing, acquisition financing and capital expenditure, indicating sustained demand for both balance-sheet optimisation and growth-oriented funding, the report noted.

Notable deals include the $193 million raised by a PharmEasy group entity, the $183 million raised by a Shapoorji Pallonji Group entity for refinancing existing debt, and $182 million secured by the GMR Group for refinancing and further investments across group companies. The real estate, healthcare, and other industrial products comprised over 70% of private credit deals in July-December.

Global funds, which comprise institutions headquartered outside India with a multi-country presence, have made a sizeable contribution to deal value in the private credit market, even as they participated in fewer deals than their domestic counterparts. While 68% of the total investments in the private credit space were made by global funds in the first half of 2025, their share declined to around 36% in the second half, the report showed.

On the other hand, domestic funds dominated deal volumes in 2025, supported by their strong local presence.

Among notable exits, 360 ONE Credit Funds and its affiliates exited their investments aggregating $296 million in Serene summit Realty (US$176 million) and five other portfolio companies. ASK Alternates exited their aggregate investments of US$11 million in GMR Airports and Aurore Life Sciences in August 2025.

“While Bank and NBFC lending picked up, private credit continued to play a critical role in addressing refinancing needs, complex transactions, and selective capital expenditure funding,” Dinkar Venkatasubramanian, Partner and Leader, Debt and Special Situations, EY India said.

“Domestic private credit platforms were particularly active in the second half, reflecting growing investor confidence and market sophistication,” he added.