Mid-tier businesses turn to private credit funds amid slowed bank lending
Himadri Speciality Chemical Ltd, the Ramco Group family, and Gharda Chemicals are among scores of mid-tier businesses, primarily into manufacturing or process-based industries, that are using credit funds to raise resources as bank credit slowed due to a crunch in garnering deposits amid visibly tepid growth for long-term debt plans in the mutual funds industry.
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Credit funds are becoming the asset class of choice for wealthy investors who seek higher returns amid circumspect return prospects of debt mutual funds. Mid-rated borrowers, too, are beginning to prefer them as these instruments offer less cumbersome access to quick funds, although often on onerous terms.
«It is raining deals in the private credit space,» said Rakshat Kapoor CIO, Modulus Alternatives. «With public markets being choppy and banks facing challenges, like high credit-deposit (CD) ratios, private credit has emerged as a vital financing alternative. Sectors like engineering and manufacturing are particularly leveraging this channel to meet their funding needs.»
Many mid-sized companies are relying on alternative financing to meet capital requirements. Himadri Speciality Chemical, a Kolkata-based carbon specialist, raised around ₹1,000 crore for acquisition financing, backed by Tata Capital, two sources said. The funding will support the company's growth
