Top PwC India officials are aware that private credit has rapidly supplanted financing from the government as an option for projects in India. According to PwC, companies are increasingly using short-term loans to bridge the gap in revenue brought on by a shift in holdings loss the cost.
Over the past two years, there has been an obvious decline in new private equity (PE) investments, however there also has been a noticeable rise in PE exits from the public market. It seems likely that a large number of enterprises will approach capital markets soon in order to supply PE fund investors liquidity.
“We have observed a surge in demand for private credit,” said Bhavin Shah, Consultant & Leader of Private Equity and Deals at PwC India. Billions of dollars are currently invested in Indian enterprises by a number of major finance funds, covering both functioning and troubled credit spaces.
The interest rates off private credit offered through PE firms are often marginally higher than those on syndicated loans. Additionally, through applying their extensive foreign business management knowledge, these multinational companies offer entrepreneurs unmatched assistance.
PEs investing in India continuing to have substantial concerns about tax uncertainty. Shah said, “Many PE funds are still receiving income-tax notices on settled issues, despite efforts by the Center to bring greater understanding to the Indian tax system.”
PwC’s Eric Janson, Global Head of Private Equity, shared excitement, saying, “PE investors from around the world are planning substantial investments in India. This will be India’s decade.”
According to PwC India, 2021 witnessed the highest investments with significant private funding flowing into the Indian ecosystem, leading to record exits for early investors. Last year also saw record exits through public market sales, marking a sharp increase from 35% in 2022 to 51% in 2023 in terms of deal volumes.
The significant exits of over $20 million in calendar years 2022 and 2023 were largely driven by public market and strategic sales. On average, global PE funds have an investment holding period of 6-7 years, generating returns of 3.5x–4.5x on their original investment during these years.
For both domestic and foreign investors hoping to take advantages of the nation’s economic potential, India’s increasing appeal as a place to invest and the accessibility of private finance offer a bright future. The environment appears to be set for India Inc. to witness steady investment growth with ongoing attempts to remove tax problems with the environment.