Manisha Girotra, chief executive of Moelis India, expressed strong optimism about India's private credit market growth, citing its flexibility and attractive returns as key drivers for increased adoption in merger and acquisition transactions.

Private Credit Market Dynamics

India's private credit market, while currently small compared to global standards, shows significant potential for expansion. According to S&P Global, the market had estimated assets under management of $25-30 billion as of FY25-end, representing just 1.2% of the overall corporate lending sector.

Girotra emphasized that private credit's flexibility in cap table structuring allows it to reflect individual risk appetites, making it increasingly attractive for complex transactions. "Banks, especially global ones, are competing very hard to fund mergers and acquisitions, but you will see more private credit come into the picture," she noted.

Major Deal Examples

Several high-profile transactions demonstrate private credit's growing prominence in India. Adani Airports Holdings Ltd refinanced its $750 million debt facility for a second time with private credit lenders led by Apollo-managed funds. In June 2025, KKR & Co. provided $600 million in financing to Ranjan Pai's Manipal group, marking the American firm's largest private credit investment in India.

Competitive Landscape and Market Pressures

The private credit sector faces intensifying competition from multiple capital sources, including wholesale lenders, mutual funds, and finance companies. High equity market valuations have provided issuers with cheaper alternatives, putting pressure on private credit demand and yields. This has led to an uptick in covenant-lite transactions, according to S&P's report.

Girotra highlighted the increased competition between private capital and public markets, noting that India's IPO market raised more than ₹1.75 trillion across over 350 companies in 2025. This competitive environment has led to more dual-track processes, where companies pursue both IPO and M&A strategies simultaneously.

Sector Outlook for 2026

Girotra expects significant M&A activity in several key sectors:

Data Centres and AI Infrastructure: Industry analysts project India's data centre capacity will grow fivefold by 2030 to over 8GW from current levels of around 1GW, generating capital expenditure of over $30 billion.

Healthcare Services: The sector is experiencing robust deal activity, with examples including Manipal's $760 million acquisition of Sahyadri Hospitals and Torrent Pharma's acquisition of a controlling stake in JB Chemicals from KKR. Investment in India's pharma sector reached $8.3 billion across M&A and PE/VC deals in 2025.

Other Growth Sectors: Girotra identified semiconductors, rare earth minerals, cement, and paints as areas expected to see significant deal activity, driven by rising urban middle class and improving rural market conditions.

PE firms are expected to continue investing in single specialty healthcare formats, focusing on oncology, In Vitro Fertilization (IVF), mother and child care, dialysis, and eyecare, according to Grant Thornton Bharat data.