Ares looks to boost private credit presence in record Indian market

By Saikat Das 

Ares Management Corp. is looking to grow its business in India and sees opportunities in sectors like acquisition financing and real estate loans, where local players face tighter regulation. 

The alternative asset manager has deployed $4.5 billion to Indian companies as of the end of September, roughly half the firm’s investment in Asia over the past five years, according to Manish Jain, head of India at Ares Management Asia. Overall, the firm has about $464 billion of assets under management.

 

Firms like Ares are behind the growth of private credit in India, where lenders have stepped in to finance Prime Minister Narendra Modi’s infrastructure push with projects ranging from solar power to roads. A report by consulting firm Ernst & Young LLP said the country’s market was on track to record its first $10 billion year in 2024.

 

Private credit has generally benefitted from tighter regulation on domestic banks in the last few years. But some investors have raised concerns about weaker lending standards as competition rises, especially given that the asset class has yet to weather a meaningful economic downturn.

 

Jain expects private credit growth in “double digits” this year in India. The country may benefit as China’s real estate crisis deepens, dragging down a once dominant source of high-yield opportunities in the region and forcing investors to look elsewhere for yield. 

 

Ares lends to an array of industries though it prefers companies with cash generating assets that are poised to grow in tandem with the economy, Jain said. It targets deals in the range of $50 million to $200 million and aims to earn returns above 10 per cent for performing credits, and nearer to 20 per cent for special situations in dollar terms.