(Bloomberg) A bank owned by Indian billionaire Uday Kotak plans to launch its first private credit fund this year, joining a growing number of industry players rushing to enter the fast-growing direct-lending market.
Nilesh Shah, CEO of Kotak Mahindra Asset Management Ltd, which manages 4.8 trillion rupees in assets, said the fund aims to raise about 10 billion rupees ($119 million), depending on investor demand.
Private credit is expanding as an asset class globally, but India has become a hotbed of institutional investors and funds lending directly to companies as investors seek higher returns.
Kotak Mahindra AMC’s peers Nippon Life India Asset Management Ltd. and ICICI Prudential Asset Management Ltd. are already in the space, and competition is heating up as global players such as Cerberus Capital Management LP and Verde Partners LP also see opportunities in the market.
“There is growing demand for private credit in India because traditional channels only have access to the highest rated credit,” Shah said in an interview on Monday. The fund will invest in performing credit, he said.
India is seeing a subtle shift towards doing credit deals, with funds trading with internal rates of return below 18%, according to a report released last week by EY. Private credit investments surged to a record $6 billion in the first half of 2024.
India’s fifth-largest asset manager is building out a five-person private credit team, having appointed Saurabh Tripathi as chief investment officer for the strategy last month. The planned private credit fund is expected to be launched by December after getting regulatory approval.
