Domestic funds drive India’s private credit market as investments reach US$3.5 billion in H1 2026: EY Report

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Domestic funds accounted for 74% of deal value and nearly 79% of deal count
Real estate led private credit deployment, followed by healthcare and food and beverage
Mid-sized deals accounted for 61% of deal value, up from 51% in H2 2025
Nearly 73% of private credit investors expect market activity to remain strong over the next one to two years

Mumbai, 20 August 2026 – Domestic funds emerged as the dominant force in India's private credit market in H1 2026, accounting for 74% of total deal value and nearly 79% of deal volume, according to the EY Private Credit Report H1 2026. The market remained resilient during the period, with investments reaching US$3.5 billion across more than 100 transactions above US$10 million, broadly in line with US$3.4 billion recorded in H2 2025.

Private credit activity continued to be supported by refinancing, holding company (HoldCo) funding and acquisition financing, despite global macroeconomic uncertainty and market volatility. The increasing participation of domestic capital highlights the growing maturity of India's private credit ecosystem and the expanding role of alternative financing solutions for businesses.

According to the EY report, real estate continued to attract the largest share of private credit investments, accounting for 35% of the total deal value in H1 2026. Healthcare and food & beverage followed, contributing approximately 13% and 12%, respectively. Notably, food & beverage witnessed a sharp increase in activity, with its share of total deal value rising from 1% in H2 2025 to 12% in H1 2026, reflecting growing investor interest in consumer-focused sectors

Dinkar Venkatasubramanian, Partner and National Leader - Debt and Special Situations, EY India said, “India's private credit market is entering a new phase of evolution. What began as a niche source of alternative capital has become an important pillar of the country's financing ecosystem. We are witnessing the emergence of new opportunities across acquisition financing, growth capital, refinancing, special situations and value creation-led transactions. The increasing participation of domestic capital continued regulatory strengthening and growing acceptance of private credit among borrowers are all contributing to a deeper and more resilient market. As India's economy continues to expand, we believe private credit will play an increasingly important role in funding growth, enabling transformation and supporting the next generation of Indian enterprises.”

Domestic funds strengthened their position in India’s private credit market during H1 2026, accounting for 74% of total deal value and approximately 79% of deal volume. By ticket size, transactions above US$120 million constituted 18% of total deal value, compared with 27% in H2 2025. In contrast, transactions in the US$10 million to US$60 million range accounted for 61% of total deal value, up from 51% in the previous period. This shift highlights the growing prominence of mid-sized transactions, as lenders increasingly focused on targeted opportunities with stronger risk-return visibility.

Notable transactions in H1 2026 included US$176 million raised by Kalpataru Properties Limited for refinancing; US$156 million raised by HyFun Foods Group for refinancing and working capital requirements; US$150 million secured by the GMR Group to fund group companies; US$124 million raised by the Manipal Group for refinancing; and US$113 million raised by Inspira Group's Lenexis Foodworks Private Limited for acquisition financing.

Vishal Bansal, Partner, Debt and Special Situations, EY India said, “The growing share of domestic capital is one of the most significant developments in India's private credit market. Domestic funds are increasingly identifying opportunities across refinancing, acquisition financing and special situations, particularly in the mid-market segment where demand for structured capital remains robust. At the same time, regulatory developments and a broader set of financing options are improving transaction execution and supporting the continued growth of the asset class.”

Macroeconomic environment

The global economic environment in H1 2026 was marked by macroeconomic and geopolitical uncertainty, leading to volatility across commodity, currency and capital markets.

Against this backdrop, India remained resilient. The RBI, through its Monetary Policy Committee, adopted a calibrated yet growth-supportive stance and projected GDP growth of 6.6% for FY27. Headline CPI inflation rose gradually to 3.4% in March, 3.5% in April and 3.9% in May 2026, driven largely by higher food inflation.

Optimism for future investment opportunities: EY Private Credit Pulse Survey

The June 2026 EY Private Credit Pulse Survey indicates a constructive outlook for India’s private credit market, with nearly 73% of respondents expecting activity to remain strong over the next one to two years. About 33% of respondents targeted an internal rate of return (IRR) of 12% to 18%, while 67% preferred opportunities with IRRs above 18%. Demand continues to be driven by stress-related situations, capital expenditure requirements and M&A financing needs.

Views on the impact of ongoing geopolitical developments were mixed, with most respondents reporting no material impact on deployment activity, while others indicated a more cautious approach to sector and geographic selection. The EY survey also found that AI is increasingly being adopted to support data analysis, portfolio monitoring and underwriting. Respondents identified real estate as the sector with the highest perceived default risk, followed by roads, energy and renewables, metals and manufacturing.

Outlook

India’s private credit market is expected to remain resilient over the next two to three years, supported by demand for flexible capital across growth, refinancing, special situations and M&A-related financing. While real estate is likely to remain an important deployment area, infrastructure and other asset-heavy sectors could emerge as key areas. Large-value transactions are expected to continue attracting global funds, while domestic investors are likely to deepen their role in the market, further strengthening the overall private credit ecosystem.

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