M&As: Private credit funds unfazed by entry of banks

Private credit players seem unperturbed by the Reserve Bank of India’s (RBI) decision to allow banks to fund mergers and acquisitions (M&As).

Acquisition financing is a small piece of private credit

According to these entities, acquisition funding is one among the several types of deals they undertake, comprising 15-25% of their total books. Promoter financing and loan against shares are among the other areas of operations.

Kapil Singhal, managing partner – private credit, True North, said the RBI’s decision will have a miniscule impact on private credit funds. “Acquisition financing is only one of the many uses. Other uses include shareholding consolidation, pre- IPO holdco deals, loans against listed shares, repayment cash flow mismatches, etc,” Singhal said in a LinkedIn post.