Motilal Oswal Alternates launches ₹3,000 crore maiden private credit fund

“There is a fundamental need for credit as India continues to grow at between 6-7% or more," Rakshat Kapoor who heads Private Credit at the firm, told Mint in an interview. “Over the next few years, with ongoing capex cycle, the high requirement for capital that may not entirely come from traditional sources like banks or public/private equity, a significant chunk will come from the credit funds."

The proposed fund, which includes a green shoe option of ₹1,500 crore, will blend secured lending with equity-style diligence and aims to generate risk-adjusted returns from straight debt yields as well as potential equity-linked gains.

“We expect to generate returns through a combination of regular fixed contracted yields and or returns linked to equity performance. So, this is proposed to be combination of regular private and hybrid credit fund and will have differentiation in the existing credit funds landscape," Kapoor said.

The fund has a six-year tenure with a three-year deployment period and has attracted capital from family offices and ultra-high net worth individuals, along with institutional investors. Ticket sizes will range at ₹250-500 crore, with investments in 15-20 companies that typically have an operating history of about 10-15 years and beyond. These will be mature businesses that are generally profitable, with a scale of $100-150 million and above.

Shifting credit landscape

The launch comes at a time when India’s credit landscape is undergoing a structural shift as traditional lenders become more selective, creating more opportunities for private credit.

The fund seeks to address the needs of mid- to large-sized corporates across sectors such as manufacturing, engineering, industries, supply chain and healthcare that require timely, flexible and non-dilutive capital.

Despite a burgeoning equity capital market, private capital often faces volatile periods where getting liquidity becomes challenging. Kapoor emphasized that their private credit fund will also address these opportunities to facilitate exits for equity and other shareholders, while enabling promoters to consolidate their stake through buybacks in a joint venture or from other investment firms on their cap tables.

He said that private credit has, to some extent, already begun competing with equity as companies seek non-dilutive capital for growth requirements, acquisitions, expansion and resolving short-term credit disruptions.

Motilal Oswal Alternates has raised over ₹23,000 crore across 11 private equity and real estate strategies and is poised to exceed $3.5 billion in assets under management over the next year with the addition of the new private credit fund. The proposed fund completes the evolution of the platform into a full-spectrum alternatives firm built on focused underwriting and deep sectoral insight.

“With an existing ecosystem of varied investing businesses, already there in the system, private credit is more of an extension to our existing strategies as this asset class has seen a fair bit of evolution over the last few years," Kapoor said.

Around two decades ago, private credit deployment was more centered around providing rescue capital to businesses and buying out their secondary debts, refinancing and cleaning out balance sheets.

“In the current cycle, we are seeing cleaner balance sheets with companies seeking incremental growth capital which will be our core area of focus," Kapoor explained. “If a credit fund is delivering a 14-16% return over a decade, it will deserve an allocation in many funds managers portfolio which is what we are seeing play out today," he said.

Kapoor's comments come as India’s private credit market sits at a turning point with many investment firms launching their own vehicle to bridge the gap caused due to limited supply from banks and non-banking financial companies.

The country’s private credit market saw a sharp surge in deal activity, with total deployment reaching $9 billion across 79 deals (above $10 million) in the first half of 2025, a 53% rise over the year-ago period, according to an August report by consulting firm EY. This was driven by stable interest rate expectations and gaps left by banks in sectors like infrastructure and real estate.

While global funds continue to dominate private credit, domestic players have focused on mid-market and opportunistic deals. ASK Group, True North, Edelweiss and Multiples Alternate Asset Management are among those also targeting this opportunity.

Others include the National Investment and Infrastructure Fund's (NIIF) $2 billion plan to attract global capital, alongside Prabhudas Lilladhar, Ascertis Credit and Vivriti Asset Management that have also launched new funds focused on private credit and mid-market investments. Blackstone Group and Bandhan AMC are also launching new investment platforms.