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Business Standard
03-07-2025
- Business
- Business Standard
Private credit deals gaining momentum in India, says Cerberus MD Ghosh
The market is warming to large private credit deals in India, where local borrowers are typically less levered than their peers in the rest of Asia, according to Indranil Ghosh, managing director and head of pan-Asia special situations at Cerberus Capital Management. Cerberus, which has $65 billion under management globally, was among the anchor investors in Shapoorji Pallonji Group's $3.4 billion financing, the country's largest private credit deal to date. While deals of that scale are still a rarity, growing capital needs and relatively low leverage are building lenders' confidence in financing larger Indian deals, Ghosh said. Deals this year are already picking up. KKR Inc. inked its largest ever credit investment in India with a $600 million financing for conglomerate Manipal Group. And Indian clean energy producer Greenko Energy Holdings signed a $650 million private credit deal to buy back a stake in the company. Even three years ago, seeing multiple Indian deals larger than $100 million would've been unthinkable, Ghosh said. 'We expect this trend to continue as Indian companies have significant capital needs,' said Ghosh. A major draw for global investors like Cerberus has been Indian companies' balance sheets. On average the loan-to-value ratio among Indian private credit borrowers, which measures the size of a financing against its collateral, is about 40 per cent, Ghosh said. 'In the rest of Asia, and even in developed markets, the gauge would be over 60 per cent,' he added. Lower ratios give investors confidence they'll be repaid if borrowers are required to sell assets. Shapoorji's deal, for instance, closed at a loan-to-value ratio of about 16 per cent, one of the key factors that attracted global lenders like Ares Management Corp and Farallon Capital Management. Despite the market's growth, deal sizes in India, and Asia more broadly, still pale in comparison to more established private credit markets in the US and Europe. The region only accounts for about 7 per cent of the global market, according to a March PwC report, and lenders still tend to focus on smaller, higher-yielding or distressed deals. A rush of new local private credit funds setting up shop in India see this as an opportunity. Motilal Oswal Financial Services is opening its first private credit fund, and Kotak Alternate Asset Managers Ltd. has plans to raise as much as $2 billion, targeting returns between 18 per cent and 20 per cent. Even the government is piling in — with India's quasi-sovereign fund, the National Investment & Infrastructure Fund, planning to raise as much as $2 billion in its latest private credit fund, backed by global investors including the Abu Dhabi Investment Authority. The Trump administration's tariffs could also be a tailwind for India, as several asset allocators are 'increasingly exploring ways to diversify' into other parts of the global economy, said Ghosh. Challenges Remain Ghosh said he could see some asset quality issues for small- and mid-sized corporates with cyclical businesses or governance issues, but he does not anticipate any imminent large-scale defaults in Indian private credit. That's because most of the larger deals are backed by high-quality sponsors with strong assets and access to multiple sources of liquidity, he said. 'Indian large and mid-sized companies have significantly raised their governance standards when compared to 10 years ago,' he said. But when deals do go south, the avenues for resolution in India can be a deterrent to global capital. India technically limits corporate insolvency proceedings to 330 days, but the courts and lenders have grappled with perennial delays.
Mint
03-07-2025
- Business
- Mint
India Warming to Larger Private Credit Deals, Cerberus Says
(Bloomberg) -- The market is warming to large private credit deals in India, where local borrowers are typically less levered than their peers in the rest of Asia, according to Indranil Ghosh, managing director and head of pan-Asia special situations at Cerberus Capital Management. Cerberus, which has $65 billion under management globally, was among the anchor investors in Shapoorji Pallonji Group's $3.4 billion financing, the country's largest private credit deal to date. While deals of that scale are still a rarity, growing capital needs and relatively low leverage are building lenders' confidence in financing larger Indian deals, Ghosh said. Deals this year are already picking up. KKR Inc. inked its largest ever credit investment in India with a $600 million financing for conglomerate Manipal Group. And Indian clean energy producer Greenko Energy Holdings signed a $650 million private credit deal to buy back a stake in the company. Even three years ago, seeing multiple Indian deals larger than $100 million would've been unthinkable, Ghosh said. 'We expect this trend to continue as Indian companies have significant capital needs,' said Ghosh. A major draw for global investors like Cerberus has been Indian companies' balance sheets. On average the loan-to-value ratio among Indian private credit borrowers, which measures the size of a financing against its collateral, is about 40%, Ghosh said. 'In the rest of Asia, and even in developed markets, the gauge would be over 60%,' he added. Lower ratios give investors confidence they'll be repaid if borrowers are required to sell assets. Shapoorji's deal, for instance, closed at a loan-to-value ratio of about 16%, one of the key factors that attracted global lenders like Ares Management Corp and Farallon Capital Management. Despite the market's growth, deal sizes in India, and Asia more broadly, still pale in comparison to more established private credit markets in the US and Europe. The region only accounts for about 7% of the global market, according to a March PwC report, and lenders still tend to focus on smaller, higher-yielding or distressed deals. A rush of new local private credit funds setting up shop in India see this as an opportunity. Motilal Oswal Financial Services is opening its first private credit fund, and Kotak Alternate Asset Managers Ltd. has plans to raise as much as $2 billion, targeting returns between 18% and 20%. Even the government is piling in — with India's quasi-sovereign fund, the National Investment & Infrastructure Fund, planning to raise as much as $2 billion in its latest private credit fund, backed by global investors including the Abu Dhabi Investment Authority. The Trump administration's tariffs could also be a tailwind for India, as several asset allocators are 'increasingly exploring ways to diversify' into other parts of the global economy, said Ghosh. Ghosh said he could see some asset quality issues for small- and mid-sized corporates with cyclical businesses or governance issues, but he does not anticipate any imminent large-scale defaults in Indian private credit. That's because most of the larger deals are backed by high-quality sponsors with strong assets and access to multiple sources of liquidity, he said. 'Indian large and mid-sized companies have significantly raised their governance standards when compared to 10 years ago,' he said. But when deals do go south, the avenues for resolution in India can be a deterrent to global capital. India technically limits corporate insolvency proceedings to 330 days, but the courts and lenders have grappled with perennial delays. Improving those mechanisms is a requirement for many global investors still on the sidelines, who 'dislike lingering debt resolution processes,' Ghosh said. More stories like this are available on
The Star
20-05-2025
- Business
- The Star
Carlyle on Japan hiring spree for new US$3bil fund
TOKYO: Carlyle Group Inc has said it is on course to hire 10 investment professionals in Tokyo as it starts dealmaking for its latest 430 billion yuan (US$3bil) Japan buyout fund. The Washington-based private equity firm has already made four junior to mid-level hires this year, and aims to add six more by December, according to Carlyle Japan co-head Takaomi Tomioka. That will bring its total number of investment professionals in Japan to 35. Private equity has found a sweet spot in Japan in recent years, where borrowing costs remain low and companies from large corporations to smaller family-owned businesses have become receptive to selling off operations. Investors are also more keen to allocate money to Japan-focused funds. But the boom has also made recruitment increasingly competitive in the market, Tomioka said in an interview. 'Many new funds that have set up in Japan are frantically trying to hire,' he said. 'The competition is very intense.' Carlyle's Japan expansion comes as US President Donald Trump's tariff policies cloud the outlook for global businesses and investors. That has made evaluating new opportunities and exits via initial public offerings (IPOs) more complex, according to Tomioka. Most of Carlyle's Japan investments have been in medium-sized companies with a domestic focus, helping to shield it from some of the global trade turmoil. The firm, now in its 25th year of business in Japan, is still on track to invest its planned 100 billion yuan in the country for 2025, Tomioka said. Carlyle is seeking an IPO this year for portfolio company Orion Breweries Ltd, Tomioka said, pointing to the Okinawa-based beermaker's locally focused consumer business as less likely to be impacted by the trade ructions. Carlyle took Orion private in 2019 with the investment arm of Nomura Holdings Inc. Tariff policies have also had little influence on the factors driving dealmaking for private equity in Japan, according to Tomioka. Intensifying pressure to improve shareholder value is spurring local companies to go private or sell off non-core operations, and many smaller businesses face succession issues, he said. 'There is a significant deal flow,' he said. 'However, we need to be cautious about whether the companies we evaluate for investment can actually execute their business plans as planned within the current global economic environment. That assessment is crucial.' Most recently, Carlyle has acquired KFC Holdings Japan Ltd and is in the process of privatising software provider Kaonavi Inc. Carlyle's latest Japan buyout fund, its fifth, finished fundraising last year and is about 70% bigger than the previous one. Appetite was so strong that it sapped investor interest from a separate Carlyle pan-Asia buyout fund, Bloomberg reported last year. Japan-focused funds have drawn investment during a period of stagnant fundraising. The share of private equity capital raised focused on the country rose to 15% of the Asia-Pacific total last year from 7% in 2019, according to a report from Bain & Co. In the current global environment, Japanese companies that are focused on domestic businesses and not expanding globally are actually very appealing, Tomioka said. 'They are easier to invest in right now, and many are in our pipeline,' he said. — Bloomberg
Business Times
19-05-2025
- Business
- Business Times
Carlyle on Japan hiring spree after new US$3 billion buyout fund
[TOKYO] Carlyle Group said it is on course to hire 10 investment professionals in Tokyo as it starts dealmaking for its latest 430 billion yen (S$3.8 billion) Japan buyout fund. The Washington-based private equity firm has already made four junior to mid-level hires this year, and aims to add six more by December, according to Carlyle Japan co-head Takaomi Tomioka. That will bring its total number of investment professionals in Japan to 35. Private equity has found a sweet spot in Japan in recent years, where borrowing costs remain low and companies from large corporations to smaller family-owned businesses have become receptive to selling off operations. Investors are also more keen to allocate money to Japan-focused funds. But the boom has also made recruitment increasingly competitive in the market, Tomioka said. 'Many new funds that have set up in Japan are frantically trying to hire,' he said. 'The competition is very intense.' Carlyle's Japan expansion comes as US President Donald Trump's tariff policies cloud the outlook for global businesses and investors. That has made evaluating new opportunities and exits via initial public offerings (IPOs) more complex, according to Tomioka. Most of Carlyle's Japan investments have been in medium-sized companies with a domestic focus, helping to shield it from some of the global trade turmoil. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The firm, now in its 25th year of business in Japan, is still on track to invest its planned 100 billion yen in the country for 2025, Tomioka said. Carlyle is seeking an IPO this year for portfolio company Orion Breweries, Tomioka said, pointing to the Okinawa-based beermaker's locally focused consumer business as less likely to be impacted by the trade ructions. Carlyle took Orion private in 2019 with the investment arm of Nomura Holdings. Tariff policies have also had little influence on the factors driving dealmaking for private equity in Japan, according to Tomioka. Intensifying pressure to improve shareholder value is spurring local companies to go private or sell off non-core operations, and many smaller businesses face succession issues, he said. 'There is a significant deal flow,' he said. 'However, we need to be cautious about whether the companies we evaluate for investment can actually execute their business plans as planned within the current global economic environment. That assessment is crucial.' Most recently, Carlyle has acquired KFC Holdings Japan and is in the process of privatising software provider Kaonavi. Carlyle's latest Japan buyout fund, its fifth, finished fundraising last year and is about 70 per cent bigger than the previous one. Appetite was so strong that it sapped investor interest from a separate Carlyle pan-Asia buyout fund, Bloomberg reported last year. Japan-focused funds have drawn investment during a period of stagnant fundraising. The share of private equity capital raised focused on the country rose to 15 per cent of the Asia-Pacific total last year from 7 per cent in 2019, according to a report from Bain & Co. In the current global environment, Japanese companies that are focused on domestic businesses and not expanding globally are actually very appealing, Tomioka said. 'They are easier to invest in right now, and many are in our pipeline,' he said. BLOOMBERG
Business Standard
07-05-2025
- Business
- Business Standard
Stiff competition in PE/VC fund landscape as more players join in
The competitive landscape for private equity (PE) and venture capital (VC) funds is getting more intense, with the number of players going up to grab a piece of the pie. According to 'India Private Equity Report 2025', released by Bain & Co and Indian Private Equity and Venture Capital Association (IVCA) on Tuesday, the number of PEs involved in deals in India has gone up by over 60-65 per cent between 2016, when there were between 100 and 110 funds, to as many as 170-180 funds in 2024. It represents a CAGR (compound annual growth rate) of 6-7 per cent in the last eight years. India continues to attract strong investment from global investors. As much as 90 per cent of the top 30 global funds, based on assets under management (AUM), have an active presence in India and their number is already growing. In 2024, global funds accounted for 50-55 per cent of the total number of funds, from 40-50 per cent in 2016. At the same time domestic funds are also flexing their muscles — they account now for 40-45 per cent of total PE funds. The rest are with government-linked funds. Not only that fundraising is increasingly becoming more competitive, with limited partners (LPs) prioritising past fund performance as one of the key drivers of new investment. A survey done for the report shows that 56 per cent of the funds surveyed in India said that LPs now demand a stronger track record, making past performance a critical factor in getting follow-on funding. Despite that, by the close of 2024, India-focused funds accounted for 10 per cent of all the funds raised in that year in the Asia Pacific region, up from 7 per cent in 2016. However, in the same period, pan-Asia funds, which have a substantial allocation for India, have gone up from 36 per cent to 57 per cent. The other clear trend is that PE investors are increasingly gravitating towards buyouts. As a result, the share of buyouts in overall PE deal-making has gone up sharply from 37 per cent in 2022 to 51 per cent in 2024. This trend reflects a strategic focus on acquiring controlling stakes in high-quality assets across sectors, driven by accumulating dry powder. To look at the trend from another perspective, small buyouts ($250 million and below) continued to gain share, making up to 68 per cent of all buyouts in 2024 compared to only 55 per cent in 2023, and 40 per cent in 2022. Buyouts in the $500 million-1 billion category have also risen from 9 per cent in 2023 to 14 per cent in 2024 across all such deals. As far as 2025 is concerned, the report says that ageing assets held by PE and VC funds for a longer period of time are expected to accelerate buyout deals. Data shows that buyout deals of over $100 million in which PEs exited within five years have shown a marked decline — they went down from 46 per cent for deals done in FY16 to only 37 per cent for deals signed up in FY19. The percentage of deals in which PEs realised their entire returns went down declined from 38 per cent to more than half at 17 per cent in the same period. In simple terms, it means that in 2025, nearly 83 per cent of deals that are over five years old could come up for exits, partial or complete, giving a big push to exits.
