Key Takeaways
- • Ashish Mehrotra, MD & CEO of Northern Arc Capital, told the ET Wealth Expo 2026 that private credit is filling funding gaps as India's economy expands and companies seek capital beyond traditional bank lending.
- • Mehrotra said the Indian private credit market has doubled and is now around $25 billion, according to his remarks at the event.
- • Mehrotra cautioned investors to focus on credit risk, liquidity and transaction structure rather than headline yields, stating "Yield can attract an investor. It is the repayment which will deliver the return."
- • Northern Arc's matured credit funds delivered average returns of around 14.7%, according to Mehrotra, though he stressed past returns should not be the sole reason to allocate.
- • Mehrotra said defaults are inevitable in credit and fund managers should structure transactions to maximize recoveries, citing improvements in India's insolvency framework and credit information access over the past decade.
Summary
As India's economy expands and companies look for capital beyond traditional bank lending, private credit is emerging as an increasingly important funding source, according to Ashish Mehrotra, MD & CEO of Northern Arc Capital. Speaking on the sidelines of ET Wealth Expo 2026, Mehrotra said strong economic growth, supported by robust credit expansion, is creating a favourable environment for the private credit market. He noted that some financing requirements, such as longer-dated expansion capital or transactions requiring specialised underwriting, do not fit neatly within conventional bank lending frameworks.
According to Mehrotra, the private credit market has doubled and is now around $25 billion. Private credit funds can provide structured financing to companies where traditional lenders may be unwilling or unable to participate, allowing investors to share in the growth and earnings potential of those businesses. He framed the asset class as a candidate for diversified portfolios, particularly where investors seek predictable income, which can be paid monthly or quarterly depending on structure.
Mehrotra cautioned against prioritizing headline yields. He identified three areas for investors and fund managers to focus on: credit risk, including borrower due diligence; liquidity, including the investment period and payout mechanics; and transaction structure, including safeguards that aid recovery. He said defaults are an inevitable part of credit investing, and the fund manager's role is to structure transactions so recoveries can occur after a default. He added that closed-ended credit funds must return capital at maturity and may carry periodic payout commitments, so managers should consider multiple repayment paths.
Mehrotra said Northern Arc's performing credit experience has demonstrated the asset class's potential when transactions are structured carefully. The firm has deployed billions of dollars through its credit funds, and its matured funds delivered average returns of around 14.7%, per Mehrotra. He stressed, however, that past returns or attractive yields should not be the sole basis for allocating to private credit. The panel, titled "Emerging arsenals of India's rich: Will these work in future," explored alternative investment avenues gaining traction among wealthy Indian investors.
According to Mehrotra, the private credit market has doubled and is now around $25 billion. Private credit funds can provide structured financing to companies where traditional lenders may be unwilling or unable to participate, allowing investors to share in the growth and earnings potential of those businesses. He framed the asset class as a candidate for diversified portfolios, particularly where investors seek predictable income, which can be paid monthly or quarterly depending on structure.
Mehrotra cautioned against prioritizing headline yields. He identified three areas for investors and fund managers to focus on: credit risk, including borrower due diligence; liquidity, including the investment period and payout mechanics; and transaction structure, including safeguards that aid recovery. He said defaults are an inevitable part of credit investing, and the fund manager's role is to structure transactions so recoveries can occur after a default. He added that closed-ended credit funds must return capital at maturity and may carry periodic payout commitments, so managers should consider multiple repayment paths.
Mehrotra said Northern Arc's performing credit experience has demonstrated the asset class's potential when transactions are structured carefully. The firm has deployed billions of dollars through its credit funds, and its matured funds delivered average returns of around 14.7%, per Mehrotra. He stressed, however, that past returns or attractive yields should not be the sole basis for allocating to private credit. The panel, titled "Emerging arsenals of India's rich: Will these work in future," explored alternative investment avenues gaining traction among wealthy Indian investors.
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