Most of the large fund houses have been doing a roaring business in the private credit space by providing alternative debt financing to underserved mid-market companies where traditional financing often faces limitations
SBI Mutual Fund plans to enter into private credit and investment in unlisted equity space through the alternative investment fund route.The fund house was operating in the private credit space but had to halt it after the RBI raised an objections, due to both the parent SBI and its subsidiary SBI MF, were operating in the same space. However, SBI MF has given its explanation which has now been accepted by the RBI.Funding gapMost of the large fund houses have been doing a roaring business in the private credit space by providing alternative debt financing to underserved mid-market companies where traditional financing often faces limitations. The lending also supports job creation and drive product and market innovation.The IPO bound fund house has all the required skill set ready and will venture into the private credit and unlisted space in next one-two months, said sources close to the development.SBI MF is also looking at real estate space through the alternative investment fund but it will take some time before a firm decision is taken, he added.Most of the fund houses operating in the private credit space through Category-II Alternative Investment Funds (AIFs) have delivered a return of 14-16 per cent.Targeted at high networth investors with a higher risk taking ability, the minimum investment in this category works out to ₹1 crore. SBI MF also provides investment opportunity through Specialised Investment Fund for sophisticated investors and has asset under management of ₹3,600 crore as of June-end.Growth avenueThe venture into private credit and unlisted equity investment space will open up a new revenue stream for the country’s largest fund house with an asset base of over ₹13 lakh crore.In January, HDFC Asset Management Company forayed into the private credit market through new Structured Credit Fund-I with a target corpus of ₹2,500 crore. The International Finance Corporation, a member of the World Bank Group, invested about ₹220 crore as an anchor investor in Structured Credit Fund-I. The fund has already secured about ₹1,290 crore in commitments in its first close.According to Moody’s Ratings report, India’s private credit market has touched $25 billion as of last December and has doubled in the last 5 years. Annual transaction value had crossed $11 billion in 2025, according to the report.The AIF investments in unlisted space are also picking pace with most mid-sized companies queuing up to list on the stock exchanges. AIFs pick up equity in these unlisted companies and offload them at the time of planned IPO in 2-3 years.The expected revival in the economy has been boosting sentiments of mid-sized companies to hit the capital markets for raising growth capital.Published on July 6, 2026
