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  • Vivriti Debt ++ Cafemutual exclusive: Private market outlook 2025

    Cafemutual exclusive: Private market outlook 2025

    New age businesses and start-up ecosystem will drive the private credit and private equity growth in India, feel experts.
    Abhinay Kumar Jan 19, 2025

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    As India ushers in 2025, its private capital market—comprising venture capital, private equity (PE) and private debt—continues to play a transformative role in shaping the nation’s economic trajectory.
     
    Sustained entrepreneurial activity, robust domestic consumption and a vibrant startup ecosystem are going to be the key drivers of private market growth in the coming years while global macroeconomic pressures and regulatory uncertainties will test the resilience of the sector.
     
    Anunaya Kumar, President, Sales & Distribution, 360 One Asset, Bhavdeep Bhatt, CEO, Northern Arc, Kalpesh Dave, Deputy CEO, Bajaj Capital, Lakshmi Iyer, Head - Fixed Income, Kotak Mahindra AMC and Sharad Mittal, CEO, Arnya Real Estates share with us their outlook for 2025 on private market. 
     
    Venture capital and private equity markets
     
    Anunaya Kumar said that the valuations for unlisted space has come down in the recent past while the valuations on listed side is on a higher size. These two developments will push both private equity and private debt.
     
    Lakshmi Iyer said there is a good and healthy flow in the economy and a lot of inflows is coming in private debt market. The order pipeline looks good for 2025 and the segment will see a good growth in the coming years also.
     
    Kalpesh Dave pointed out that the IPOs in India are providing good returns, which means that the private investors are able to get good exit delas. This will further fuel the private capital participation by the sophisticated investors. 
     
    Key trends in the private equity market
    • GDP growth and government’s constructive policy formation will help the credit market in India
    • Government’s measures for public investment and public consumption will enhance the private investment in 2025
    • Awareness and the acceptance of the private capital is increasing rapidly and the trends are expected to remain the same in the coming year also
    • Currently, the bond yields are not very lucrative, which will increase the demand for private capital
    • Valuations in the listed space are getting stressed, and this may push the investors towards private debt or equity
    Sectors that will lead the sector growth
    • New generation businesses like Swiggy, Nykaa and Zomato will lead the sector growth
    • Businesses that are dependent on the digital infrastructure will also see an increased demand for private capital
    • Real estate, pharmaceuticals, health care and manufacturing sectors may spearhead growth in the sector
    Challenges
    • Urban consumption patterns may decline, which can cause some trouble in the coming time
    • The reducing disposable income in the wake of global crisis will also play an important role
    • Though the global geo-political uncertainties have a comparatively muted impact on India, India still needs to be vigilant about the developing conditions across the world
    • Entering the market at the right price point is very important for the private capital space
    • The players need to be more aware about the product when deciding to enter in this space
    Private debt
     
    Bhavdeep Bhatt from Northern Arc said that financial advisors and MFDs should start looking at this sector as a promising opportunity. 
     
    Arnya Real Estate’s Sharad Mittal highlighted that the private credit witnessed a handsome growth in 2024 while the real estate experienced the highest push. The next three-four years look great for private capital sector in India.
     
    Trends in private debt
    • Demand of real estate (residential and commercial both) has increased and attracted an investment of more than Rs. 75,000 crore in 2024
    • All the growing sectors are facing capital requirements and private investment can play a important role in it
    • Alternative investment options including private debt are meant for the sophisticated investors with high-risk appetite and with higher lock-in periods
    • In the coming years, the alternates will see a higher weightage in the investment portfolios of the wealthy investors
     
    Opportunities around private debt
    • Private debt is a localized or domestic asset class, which allows it to be less sensitive to global volatility
    • Private debt is less volatile because it is a demand-supply driven asset class
    • Government’s focus on start-ups and entrepreneurship is resulting in the emergence of new businesses needing capital
     
    Sectors that will spearhead the private debt growth
    • Renewable energy space including e-mobility, battery manufacturing, battery charging infrastructure, EV manufacturing, plastic and e-waste management and solar panel and cell manufacturing
    • Further, agriculture and water sector (drinking, treatment and irrigation) will also generate a lot of demand for private credit
     
    Challenges 
    • It is a relatively newer asset class with limited number of players
    • The awareness around the private debt is still at a critical level 
    • Geopolitical tension may affect the private debt market in India 
    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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