Indian Economy Shows Growth and Expansion
Private credit is becoming more popular for Indian projects as entrepreneurs prefer short-term debt over giving up ownership. This is happening because new private equity (PE) investments are decreasing, and many PEs are leaving through public markets.
Several companies are planning to enter capital markets soon to provide money to PE fund investors.
"Private credit demand is going up. Big credit funds are investing lots of money in Indian companies, both struggling and doing well," says Bhavin Shah, a partner at PwC India.
PE firms offer private credit at slightly higher rates than shared loans and also provide global expertise to entrepreneurs.
Tax uncertainty worries PEs in India, with many still getting income-tax notices despite efforts to clarify the system," Shah notes.
"This is India's decade, with global PE investors planning big investments," says Eric Janson, global head of private equity at PwC.
In 2021, India saw record private investments, leading to record exits for early investors. In 2023, there were also record exits through public market sales.
Global PE funds usually hold their investments for 6-7 years and make returns of 3.5x–4.5x on their original investment in CY22 and CY23.
M&A activity increased in Q1 2024, with 455 deals worth $25.6 billion, a 24% increase from Q4CY23, showing a market change.
Dinesh Arora, a partner at PwC India, says: "Amid opportunities, the Indian economy is doing well. Q1 2024 is the best in six quarters, showing growth and a desire for expansion."
While M&A average deal sizes stayed the same, PE deal sizes fell 39%, with most deals under $50 million, especially in the lower- and mid-market segments.
The biggest deal was in media and entertainment, with Reliance Industries and Walt Disney forming a joint venture.