Mumbai: Private credit deployments dropped by a sharp 61 per cent to USD 3.5 billion in January-June 2026 from USD 9 billion in the year-ago period amid a volatile macro environment, a report said on Thursday.The overall activity was buoyed by a single USD 3.1 billion fundraise in the year-ago period, the report by consultancy firm EY said, adding that the deal activity is also higher than the USD 3.4 billion witnessed in the second half of 2025.Nearly three-fourths of the deployments were by domestic private credit funds, the report said, adding that the global funds' share by the quantum of money deployed has been steadily dropping.Foreign funds' share declined to 26 per cent from 36 per cent in H2 2025 and 68 per cent in H1 2025.Despite perceived riskiness in the sector, real estate continued to be a favourite for private credit funds when it comes to investments during the first half of 2026, with the USD 176 million raised by Kalpataru, leading the chart as the biggest deal during the period, the report said.Also Read | No takers: Public sector banks put ₹39,000 cr of bad loans up for sale againReal estate accounted for 35 per cent of the deployments, followed by healthcare at 13 per cent and food and beverages at 12 per cent, it said, adding that stress-related situations, capital expenditure requirements and acquisitions continued to be the mainstay for demand.Private credit involves lending in specialised situations where formal or regulated financial entities, including banks and non-bank lenders, are typically unable to support a borrower. There is a lot of flexibility inherent in the avenue, with deal structuring of mutual comfort, and the lending typically earns higher returns for the lenders.The first half of the year also saw a slew of activities on the regulatory and external front which may influence private credit volumes, including a surge in bank credit growth, the RBI allowing banks to do acquisition finance and also introducing limited-period incentives for external commercial borrowings.Also Read | RBI deputy governor Murmu calls for focus on meaningful financial inclusionThe report said it has only captured deals of over USD 10 million each, and depended on publicly available data and also disclosures of certain deals in surveys.From a fund raising perspective, it outlined Kotak Alternate Assets Management's USD 691 million raise under the Kotak Real Estate Fund, USD 496 million Kotak Yield and Growth Fund and USD 42 million for the Kotak Life Sciences Fund, along with a USD 290 million raise by Avendus' structured credit fund and USD 183 million by Motilal Oswal Alts' India Credit Excellence Fund as among the major deals. P