India's private debt market to top $18 bn in 2024 as economy grows: Report

Country is leader in Asia Pacific for private debt, says investment data company

India’s private debt market will have more than $18 billion in assets under management (AUM) by the end of 2024, according to a report by Preqin, an investment data company.

The market is expanding as businesses increasingly turn to flexible financing options to fuel growth, especially in sectors where traditional lending may not suffice.

India-focused private debt AUM grew from $14 billion in 2022 to nearly $18 billion a year later, marking a 29 per cent increase. The growth cements India’s position as a regional leader in private debt, outpacing markets in Asia Pacific, according to the report.

This shift to private debt has been helped by the introduction of regulatory reforms such as the Insolvency and Bankruptcy Code to bolster investor confidence.

While private debt is the fastest-growing asset class, venture capital (VC) continues to dominate India’s private capital landscape. VC companies' AUM neared $45 billion in 2023, accounting for 36 per cent of all India-focused private capital AUM.

The country’s growing economy and favourable demographics have buoyed private capital, leading to 560 deals of more than $6 billion in the first half of 2024.

Private equity in the country remains resilient as well, benefiting from robust public markets and consistent fundraising, according to the report. Exit volumes have held steady, and fundraising figures for 2024 are on pace to surpass the previous year. More than $1 billion had been raised by June 2024, compared to less than $2 billion in 2023.

Preqin data shows that private equity exit volumes in India reached 85 in 2023 and 46 by mid-2024.