Local funds' share rises in private credit market: EY report

MUMBAI: Domestic funds drove the private credit market in the first half of 2026, accounting for 74% of deal value and nearly 79% of transaction volume, as investments reached $3.5 billion across more than 100 transactions above $10 million, according to an EY report.

Private credit investments were broadly similar to the second half of 2025 levels of $3.4 billion, with refinancing, holding-company funding and acquisition financing serving as key drivers of activity. "The growing share of domestic capital is one of the most significant developments in India's private credit market," Vishal Bansal, partner, debt and special situations, EY India, said.

The growth in private credit comes as demand for corporate financing continues to accelerate. Bank credit to large industries rose from 4.6% in calendar 2025 to more than 14% in the first five months of 2026, while bank financing to MSMEs has increased at a double-digit pace for four consecutive years. Private credit is expected to benefit from the ongoing capital expenditure cycle.


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Real estate accounted for 35% of private credit deal value in H1, followed by healthcare at 13% and food and beverage at 12%.

The food and beverage share rose sharply from 1% in second half of 2025.

Real estate is expected to remain a major private-credit segment, particularly for land acquisition and pre-approval financing, where traditional bank and NBFC funding remains limited.

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Infrastructure, renewables and energy could also become larger themes as capital requirements rise.

Global funds are likely to retain their dominance in large-ticket deals because they can write bigger cheques, while domestic funds are increasingly expected to participate through co-investments, EY said.