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Cerberus eyes India’s private debt growth as shadow banks retreat

Submitted by admin on May 10th, 2024

Cerberus Capital Management LP has an expansion plan for its Indian private credit portfolio as local non-banking lenders switch their focus from corporate lending to consumer credit.

There is a “significant opportunity set for private credit lenders, both local and international, to pick up a portion of this space,” says Indranil Ghosh, managing director and head of pan-Asia special situations, in an interview.

The Indian financial landscape is becoming a huge market for private credit activity as international firms, enticed by the fastest-growing economy, deploy billions. The global private credit market valued at $1.7 trillion, has already posed a serious challenge to mainstream lending, offering higher returns to lure investors.

“With the global geopolitical and economic complexity in today’s day and age, India is positioned as a stable landing spot for long-term investment,” Ghosh said. “We see India as one of the most attractive destinations for private credit investors from an opportunity size and quality standpoint.”

In recent months, India’s shadow banks have been pressurized as regulators restricted the activities of the likes of IIFL Finance Ltd and JM Financial Ltd. In India, private credit assets under management are likely to expand from 0.4 percent in 2022 to 1-1.2 percent of the GDP by 2028, as per a private credit report by Indian Venture and Alternate Capital Association and Praxis Global Alliance.

“Our India business should grow more than last year as the Indian market is seeing the recent emergence of a large number of local private credit managers who raise capital from Indian high net worth individuals,” Ghosh said.

Financial, real estate, and manufacturing sectors will continue to tap private credit to meet their capital needs, according to Ghosh.

“Our India business should grow more than last year as the Indian market is seeing the recent emergence of a large number of local private credit managers who raise capital from Indian high net worth individuals,” Ghosh said.