Trends Watch: Private Credit Investing in India

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Rubin Chheda, Managing Director, Private Credit, Neo Asset Management.  

What is your outlook for private credit investing in India?   

We believe patient and growth capital from private credit will play a critical role in India's economic expansion, with demand expected to grow at a 16% compound annual growth rate (CAGR) to $60 billion by 2030 estimate. As the economy becomes more complex and dynamic, we believe fund structures like alternative investment funds (AIFs) are best suited to address the growing demands of corporates, complementing the banks and non-bank financial companies (NBFCs) who are getting more “cookie cutterised” in their approach 

Where do you see the greatest opportunities and why? 

India stands out amongst its peers with strong nominal GDP growth and relatively low leverage. India mid-market credit is a large opportunity with asymmetric risk reward, with direct access to cash flows, debt/EBITDA levels less than four and typically sole lender position in the cap table. Adjusted for FX hedging, this segment offers 18-20% dollar returns offering significantly more alpha to that in developed markets.   

What are the greatest challenges you face and why?  

Credit is more about recovery than lending. So, it's important to inculcate a team culture that is focused more on asset monitoring than just dealmaking. Over the last two years, the team has assessed more than 400 transactions and invested in 18 deals, signifying the importance of selection of counterparties. Hence, another key challenge is to build the right network to be able to generate the right feedback loop. 

What keeps you up at night?  

The responsibility of ensuring that we continue to deliver superior risk-adjusted returns for all members of our ecosystem. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.