Motilal Oswal Alternates launches ₹3,000 crore maiden private credit fund
“There is a fundamental need for credit as India continues to grow at 6-7% or more,” Rakshat Kapoor, the firm’s head of Private Credit, told Mint in an interview. “Over the next few years, with the ongoing capex cycle, a significant portion of the high capital requirement will come from loan funds, which may not come entirely from traditional sources such as banks or public/private capital.”
Recommended backdrop including green shoe option ₹1,500 crore will blend secured lending with equity-style rigor and aims to generate risk-adjusted returns from straight debt returns as well as potential equity-linked gains.
“We expect to generate returns through a combination of regular fixed contractual returns and/or returns linked to equity performance. Hence, this is proposed to be a combination of regular private and hybrid credit fund and will have differentiation in the existing credit funds environment,” said Kapoor.
The fund has a six-year tenure with a three-year distribution period and has attracted capital from family offices, ultra-high net worth individuals, as well as institutional investors. Ticket sizes will change as follows: ₹250-500 crore with investments in 15-20 companies, usually with an operating history of around 10-15 years and longer. These will generally be profitable, mature businesses with a scale of $100-150 million and above.
The credit environment is changing
The launch comes at a time when India’s credit landscape is undergoing structural change as traditional lenders become more selective and create more opportunities for private credit.
The fund aims to meet the needs of medium- and large-sized companies in sectors that require timely, flexible and non-dilutive capital, such as manufacturing, engineering, industrial, supply chain and healthcare.
Despite a thriving equity market, private capital often faces volatile periods when it becomes difficult to obtain liquidity. Private loan funds will also address these opportunities to facilitate exits of equity and other shareholders, while also allowing promoters to consolidate their stakes in a joint venture or through buybacks from other investment firms on the cap tables, Kapoor emphasized.
He said private credit is beginning to compete with equity to some extent as companies seek non-dilutive capital to address growth needs, acquisitions, expansion and short-term credit disruptions.
Motilal Oswal Alternatives rose ₹23,000 crore across 11 private equity and real estate strategies and is set to cross $3.5 billion in assets under management next year with the addition of a new private credit fund. The proposed funding completes the platform’s transformation into a full-spectrum alternative firm built on focused underwriting and deep sectoral insight.
“With the existing ecosystem of various investment businesses already in place in the system, private credit is more of an extension of our existing strategies as this asset class has seen quite a lot of evolution over the last few years,” said Kapoor.
About two decades ago, private loan distribution focused more on providing rescue capital to businesses, purchasing their subordinated debt, refinancing and cleaning up balance sheets.
“In the current cycle, we are seeing cleaner balance sheets in companies seeking incremental growth capital, which will be our key area of focus,” said Kapoor. “If a credit fund returns 14-16% over ten years, it will deserve an allocation in many fund managers’ portfolios, as we see today,” he said.
Kapoor’s comments come at a time when India’s private credit market is at an inflection point, with many investment firms launching their own instruments to bridge the gap created by limited supply from banks and non-banking financial companies.
The country’s private credit market has seen a sharp increase in deal activity, according to an August report by consulting firm EY; total distribution reached $9 billion (over $10 million) across 79 deals in the first half of 2025; This was up 53% from the previous year period. Expectations of stable interest rates and the gaps left by banks in sectors such as infrastructure and real estate were effective in this.
While global funds continue to dominate private lending, domestic players have focused on mid-market and opportunistic deals. ASK Group, True North, Edelweiss and Multiples Alternative Asset Management are among those targeting this opportunity.
Others include Prabhudas Lilladhar, Ascertis Credit and Vivriti Asset Management launching new funds focusing on private credit and middle market investments, as well as the National Investment and Infrastructure Fund (NIIF)’s $2 billion plan to attract global capital. Blackstone Group and Bandhan AMC are also launching new investment platforms.
