Private credit deals hit record high at $7.8 billion in 2023: Report

Private credit transactions hit a record high in 2023, notching up USD 7.8 billion across 108 deals, says a report.

Global funds have contributed 63 per cent of the total private credit deals completed in the country last year in terms of value. In terms of volume, as much as 61 per cent deals have been undertaken by domestic funds, leading consultancy EY said in a report Thursday.

Investments in real estate totalled to USD 1.7 billion barely up from USD 1.6 billion in 2022. EY said it believes that fund managers are bullish on the deal flow in 2024, especially in the real estate and manufacturing sectors.

The total number of private credit deals surged to 108, amounting to a substantial value of USD 7.8 billion, surpassing the 2022 number when it was 77 deals totalling USD 5.3 billion, the report said.

The increase was fuelled by several factors, including the stabilisation of interest rates, heightened activity within the real estate sector, and a notable increase in deal value resulting from certain large transactions executed during the year.

The surge in deal value was also driven by the Shapoorji Pallonji Group's refinancing and Oaktree's Vedanta group investment totaling USD 2.4 billion.

According to Bharat Gupta, debt and special situations partner at EY, a growing economy, a cautious banking sector and a deliberate reduction in the wholesale books of NBFCs continue to provide a fertile ground for private credit funds to grow and deploy capital.

Fund managers remain optimistic regarding the availability of sufficient funds, resulting in increased fund registrations and fund raising over the last 12 months.