The murky uses of India’s private credit funds
There are plenty of high-performing private investment vehicles in India, but it’s the few that are being set up for dubious purposes that may bring harsher regulatory scrutiny to the country’s most rapidly expanding asset class.
So far, the most egregious use of these so-called alternative investment funds has been by nonbank finance companies, several of whom have employed these bespoke structures for pure regulatory arbitrage.
The alternative-asset industry in India has venture capital and hedge funds as its two bookends. The main body, however, consists of private equity and private credit. Whereas just a decade ago these two asset classes were a $200 million sideshow, now they command $83 billion, or more than four-fifths of the $100 billion committed by investors to private funds.