Private Credit in APAC: Key Trends and Market Developments

Introduction

The Asia Pacific region has witnessed a significant, almost cyclonic, surge in private credit activity over the past decade, driven by evolving market dynamics, regulatory reforms, unmet capital demands coupled with localisation and control of available credit with banks (with similar appetite and funding limitations) and the growing appetite of institutional investors for alternative assets. Private credit, broadly defined as non-bank lending to corporates and projects, has emerged as a vital source of alternative capital (for borrowers) and deployment (for investors). Set out below is a broad overview of the latest trends and developments in private credit across four key jurisdictions in the Asia Pacific region: India, Australia, Vietnam and Thailand, while placing a special emphasis on India, given its rapidly evolving landscape and the increasing role of private credit in supporting economic growth.

Regional overview: private credit in Asia Pacific

Private credit in Asia Pacific has grown at a compound annual growth rate (CAGR) of over 20% in the last five years, with further growth of approximately 46% estimated, from USD59 billion in 2024 to USD92 billion by 2027. The region’s diverse economies present unique opportunities and challenges for private credit providers: Australia boasts a mature and sophisticated private credit market; emerging economies such as Vietnam and Thailand are witnessing a nascent but rapidly expanding private credit ecosystem. India, in particular, stands out as a strong contender for the crown, due to its booming economy, strong credit appetite and active regulatory reforms.

India: the epicenter of private credit growth

Market overview

India’s private credit market has experienced exponential growth, with assets under management (AUM) estimated at USD17.8 billion in 2023, up from less than USD0.7 billion in 2010. India’s private credit market witnessed a sharp spike in deal value in H1 2025, with total deployment reaching USD9.0 billion across 79 deals. This eclipses the USD7-10 billion recorded across all 12 months in 2024, and the USD7.7 billion in 2023. Conversely, bank credit growth decelerated to 11% year-on-year in FY25 from 20.2% in FY24, reflecting conservative underwriting and delayed monetary transmission.

The Indian private credit market is characterised by diverse participants: global private credit funds, domestic alternative investment funds (AIFs), non-banking financial companies (NBFCs), and family offices. The demand for private credit is fuelled by several factors: deleveraging of public sector banks, tightening of regulatory norms for traditional lenders, regulatory arbitrage, and increasing sophistication of Indian corporates seeking flexible, bespoke financing solutions.

According to a report by Ernst & Young for H1 2025 (the “EY Report”), borrowers across sectors include:

• Mumbai International Airport Limited (Adani Group) (USD750 million) in infrastructure;
• Manipal Education and Medical Group (MEMG) (USD600 million) in healthcare;
• BILT Graphic Paper Products Limited (USD360 million);
• Aerogrid Advanced Hosting Solutions Private Limited (USD348 million) in technology; and
• Alaknanda Hydro Power Company Limited (USD236 million) in energy and renewables, among others.

However, real estate remained the most active sector with India's real estate sector accounting for 42% of the deal volume in 1H 2025.

Legislative and policy developments

The Indian legislative and regulatory authorities have undertaken a series of legislative and policy initiatives that have facilitated the growth of the bonds market and private credit in India.

The self-evaluating and ever-evolving (Indian) Insolvency and Bankruptcy Code, 2016

The enactment of a new legislation in 2016, the Insolvency and Bankruptcy Code (IBC), has significantly improved the legal framework for creditor rights and enforcement. The IBC marked a turning point for India’s business environment, particularly in the area of insolvency resolution. Prior to the IBC, India ranked 130th in the World Bank’s Ease of Doing Business index, largely due to inefficiencies in the bankruptcy process that made insolvency cases drag on for years, deterring investment. The IBC brought in a time-bound, 180-day resolution process (with a 90-day extension) and introduced Insolvency Professionals, shifting the focus to creditor rights and ensuring faster, more predictable outcomes. The IBC has provided greater certainty and predictability for private credit lenders, thereby reducing the risk premium associated with Indian credit exposures. The IBC has reduced the resolution time from an average of 4.3 years to approximately 1-2 years and provided a structured process that allows businesses and/or investors to exit the market more efficiently.

India’s insolvency regulators (the Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India) have a keen and proactive oversight over the implementation of the IBC, regularly collating and analysing performance data and recommending improvements. Despite being new legislation, the IBC has been amended approximately six times to date, accompanied by with issuance of numerous regulations, circulars and guidelines. A latest round of amendments was introduced in parliament in August 2025 and is currently pending approval. The amendment bill proposes 14-15 substantive amendments, key among which include:

• a regime for creditor-initiated insolvency resolution (CIIRP), which is a debtor-in-possession-creditor-in-control hybrid mechanism for efficient resolution at the pre-distress and early-distress stage;
• guidelines for cross border insolvency resolution;
• provisions to enable the government to prescribe rules for consolidated insolvency resolution of multiple debtors who are part of the same group;
• provisions to improve efficiency and results of the present insolvency regime, including provisions for:
1. mandatory admission of insolvency cases when debt and default are established and eliminating any scope for interpretational inconsistencies or discretionary application;
2. implementation of resolution plans or closure of the resolution process notwithstanding intercreditor disputes (as to distribution); and
3. business wise or asset-wise resolution of large corporate debtors with multiple businesses/verticals (for better value maximisation).

Liberalisation of regime for investment by alternative investment funds

AIFs, the main source of domestic private credit, are regulated by the Securities and Exchange Board of India (SEBI), which has progressively liberalised the applicable regulatory framework, particularly for Category II AIFs (which are the primary vehicles for debt funds). Recent amendments have streamlined fundraising, investment, and disclosure norms, making it easier for both domestic and foreign investors to participate in the market.

Liberalisation of ECB (external borrowing regime)

A key route through which foreign debt enters India is through external commercial borrowings (ECB). ECBs are commercial loans raised by eligible resident entities from recognised non-resident entities which are required to conform to strict parameters prescribed by Reserve Bank of India (RBI).

However, in October 2025, the RBI proposed sweeping liberalisation reforms which will further enhance the attractiveness of India as a destination for global private credit funds. Key changes proposed include:

• widening the pool of eligible lenders to include any non-individual resident entities;
• relaxing end-use restrictions;
• removing fixed cost ceilings in favour of market-based rates;
• streamlining MAMP (minimum average maturity period) requirements;
• regulating ECB limits to USD1 billion or three times net worth;
• dispensing with procedural formalities in certain cases, for procuring with AD Bank NOCs for security creation; and
• extending reporting timelines. 

Liberalisation of the regime for securitisation of NPLs

The RBI has also issued draft updated guidelines to facilitate the securitisation and direct assignment of loan exposures, enabling private credit funds to participate more actively in the secondary market for distressed and performing assets.

Key trends

• Domestic funds are leading in deal participation (by number), but global funds continued to drive value.
• There is active credit participation from mutual funds, NBFCs, retail investors, and foreign banks.
1. The EY Report highlighted a convergence in credit appetite across several large transactions in H1 2025. Vedanta Limited raised USD884 million from a wide base of lenders ‒ mutual funds (USD480 million), NBFCs (USD174 million), foreign banks (USD162 million), insurance companies (USD33 million), and an Indian bank (USD35 million). Similarly, L&T mobilised USD334 million from mutual funds, JSquare Electrical Steel Nashik Private Limited raised USD302 million from foreign banks, GMR Airports Limited secured USD174 million largely from foreign banks with some NBFC participation, while Renserv Global Private Limited raised USD118 million from mutual funds, USD29 million from a bank, and USD12 million from NBFCs.
2. The domestic investor base has widened in recent years with the rise of high net worth individuals and family offices seeking diversification and chasing yield. Large family offices globally and in India have 15% to 25% of their portfolios in alternative investments, of which 25% to 30% goes into private credit solutions, according to Julius Bäer’s report “The Indian Family Office Playbook.” 
3. The EY Report theorises that Indian family office assets are set for exceptional growth, underpinned by India’s anticipated position as the global leader in ultra high net worth individual growth, with the number expected to rise by 50.1% to nearly 20,000 by 2028. India could account for as much as 30% of private credit fundraising in APAC by 2025, with annual deal flow potentially reaching USD10 billion.
• The share of the conventional lending industry in the overall credit is declining with greater focus on retail portfolios.
1. Some regulations in India have pushed borrowers outside the traditional bank lending sphere and towards alternative funding sources. In the real estate sector, the RBI restricts bank lending to private developers for the acquisition of land, even as part of housing projects. Consequently, real estate-related transactions now dominate India’s private credit sector, accounting for more than a third of the total transaction value.
2. A report by PwC theorises that one of the factors driving growth could be the continued risk aversion of the banking sector, as evidenced by the decline in risk weighted asset density due to limited lending to lower-rated entities. The ratio of risk weighted assets to total assets for banks declined for banks from 74% to 58% over a ten-year period (as of December 2023). This could point to an opportunity for alternative lenders to step in and lend to lower-rated corporates and mid-corporate borrowers, as well as manage capital market exposures and high-risk weight exposures.
3. Indian banks are not permitted to advance funds to firms seeking equity stakes in acquisition targets. This has created a void in financing that private credit has filled, and about 35% of private credit deals are M&A-related, according to PwC research.
• The IBC has emerged as the leading route for recovery, accounting for 48% of total bank recoveries in FY 2023–24.
• Mismatch of demand and supply: competition with other forms of capital has intensified as equity market valuations have provided issuers with a cheaper alternative. Today, borrowers have options including wholesale lenders, foreign banks, mutual funds and finance companies that focus on structured credit. ​Invariably, that has put demand for private credit and its yields under pressure, which in turn has led to an uptick in covenant-lite transactions.

Challenges in enforcement of lender rights

Despite significant progress, private credit lenders in India continue to face challenges in the enforcement of their rights. Key issues include the following.

• Judicial delays: the Indian legal system is characterised by significant delays in the resolution of commercial disputes, including enforcement of security interests and recovery proceedings. While the IBC has improved timelines for insolvency resolution, practical challenges persist, particularly in complex cases involving multiple stakeholders.
• Priority of claims: the treatment of minority lenders vis-à-vis majority creditors remains a contentious issue, with frequent litigation over the priority of claims in insolvency proceedings.
• Enforcement of security: while the SARFAESI Act and other statutes provide mechanisms for the enforcement of security interests, practical challenges such as resistance from borrowers, and administrative bottlenecks can impede timely recovery.

Active private credit lenders in India

With the growth of the private credit market in India, global and domestic funds offering private and structured credit investments has expanded. Key investors include Deutsche Bank, Varde, Oaktree Capital, Farallon, Cerberus, Davidson Kempner, Elham Credit, Barclays, Ares, Edelweiss Alternatives, Synergy Capital, 360 One, OMERS, SC Lowy, BlackRock, KKR and Kotak Alternate Assets Funds. 

Australia: a mature private credit market

Australia’s private credit market has experienced transformative growth over the past decade with assets under management reaching approximately AUD224 billion as of 2025, representing a compound annual growth rate/CAGR of approximately 20%. Reports suggest that this expansion has been driven by structural shifts in the lending market, particularly the implementation of Basel III capital requirements following the global financial crisis, which altered banks’ risk appetites and capital allocation strategies.

It is reported that major Australian banks have halved their commercial real estate lending exposure from 10% to 5.5% of total assets since 2009, whilst their share of total commercial real estate lending by deposit-taking institutions has declined from 87% to 75%. Private credit now accounts for approximately USD50 billion of commercial real estate loans, reflecting 16% of total commercial real estate lending, with the market broadly divided into corporate and business-related lending (approximately AUD132 billion, representing 14% of that market segment) and commercial real estate lending (approximately AUD92 billion, accounting for 18% of that segment).

Market consolidation has emerged as a notable trend, with domestic multi-asset fund managers increasing their share from 20% to 27% of assets under management between 2024 and 2025, reflecting both investor and regulatory demands for improved transparency and governance, with larger platforms better positioned to meet these expectations.

However, it is also observed that the Australian market faces challenges and regulatory scrutiny, particularly concerning the concentration of lending in higher-risk real estate construction and development financing ‒ a segment that has historically represented the majority of credit losses in economic downturns and has effectively transferred substantial property development risk from the prudentially regulated banking sector to the less transparent non-bank sector.

The Australian Securities and Investments Commission has raised concerns regarding conflicts of interest, valuation practices, fee structures, liquidity management, and transparency. While institutional investors and large superannuation funds typically engage with funds offering transparent arrangements, segments targeting wholesale “sophisticated” and retail investors through platforms demonstrate practices that compare unfavourably against international standards. These include opaque fee and interest margin arrangements where managers may retain 50-100% of upfront and borrower-paid fees, non-independent valuations linked to management fee calculations, and inadequate disclosure of portfolio composition, impaired assets, and related-party transactions.

Looking ahead, the market is expected to benefit from falling interest rates and stabilising asset values, increased transaction activity, growing international capital flows attracted by Australia’s legal frameworks and efficient foreclosure processes, and the emergence of specialised lending segments, including asset-backed lending, infrastructure debt, and direct lending to middle-market corporates.

Vietnam: an emerging private credit destination

Vietnam’s private capital market has undergone a significant transformation in recent years, establishing itself as a leading destination for credit funds. The market recorded USD2.3 billion across 141 deals in 2024, and whilst this represented a 35% contraction from the prior year, deal count remained relatively stable in both venture capital and private equity segments. Notably, mid-sized deals in the USD100-300 million range demonstrated strong resilience, with capital invested rising 2.7 times to USD700 million, signalling improving investor confidence in sizable transactions. Buyout transactions dominated private equity activity, accounting for USD1.7 billion of the total USD1.9 billion in PE investment, reflecting a clear investor preference for mature, cash-generating businesses amid a cautious investment environment.

A significant development in the Vietnam investment landscape has been the emergence of highly structured private credit transactions. Historically, the Vietnamese lending market was highly competitive on pricing, making private credit returns difficult to achieve given the perceived high level of risk. However, this landscape has shifted considerably.

The market has also witnessed the emergence of sector-specific opportunities. Consumer credit stood at USD95 billion in 2025, whilst digital lending loan book balance is estimated to reach USD35 billion by 2030, growing at an annual rate of approximately 49%. AI funding has also surged eightfold year-on-year, whilst AgriTech investment grew ninefold, reflecting Vietnam’s increasing focus on productivity-enhancing technologies and sustainable agriculture.

Despite these positive developments, there are concerns that Vietnam’s private credit market presents several structural and regulatory challenges that investors must carefully navigate. First, capital controls fundamentally drive transaction structures. Second, scholars observe that Vietnam does not have a well-defined bankruptcy regime and large-scale bankruptcies are uncommon.

A third major concern is that offshore lenders ‒ whether banks or credit funds ‒ cannot take direct security over immovable property in Vietnam. This necessitates hybrid structures, involving local commercial banks, providing onshore loans or standby letters of credit to create a basis for security over underlying real property.

Notwithstanding these challenges, Vietnam’s trajectory towards investment grade sovereign credit ratings and its strengthening financial infrastructure present encouraging signals. The government has introduced notable reforms including the establishment of international financial centres in Ho Chi Minh City and Da Nang, a National Blockchain Strategy, stock market upgrades to enhance foreign investor access, and amendments to real estate laws addressing legal bottlenecks.

Thailand: steady growth amid regulatory evolution

Thailand’s private credit landscape has also undergone a transformation over the past two decades, with its corporate bond market emerging as the largest in the ASEAN region, with outstanding corporate bonds totalling USD166 billion by the end of 2024 ‒ a more than fourfold increase since 2000. The Thai corporate bond market has expanded, with average annual issuance increasing from USD5 billion in 2000–2011 to USD26 billion in 2021–2024, representing a more than fivefold increase. Non-financial companies have consistently dominated the market, accounting for roughly 60% to 80% of annual issuance.

A distinguishing feature of Thailand’s private credit market is the unusually high participation of retail investors, who held approximately 40% of outstanding corporate bonds at the end of 2024 ‒ an exceptionally high figure by global standards. 

However, the market faces several structural challenges: more than 90% of new corporate bond issues are investment grade, while private equity and venture capital ecosystems remain underdeveloped compared to regional peers, with angel, seed and series A funding particularly limited. Corporate reliance on bank lending remains substantial, with domestic bank credit to the private sector standing at approximately 119% of GDP at the end of 2023 ‒ one of the highest ratios in ASEAN. Non-performing loans within the SME sector remained elevated at 7.2% in 2024, with special mention loans increasing to 13.4%.

The resolution of corporate bond defaults is also cumbersome, with court-supervised rehabilitation proceedings often prolonged ‒ extending up to five years with possible extensions ‒ and restrictions on claim transfers during insolvency creating uncertainty for investors.

Conclusion

The private credit landscape in the Asia Pacific region is undergoing rapid transformation, driven by regulatory reforms, evolving market dynamics, and the growing sophistication of borrowers and investors. As seen from the above analysis, India stands out as a key market, with a supportive policy environment, ongoing legislative reforms, and a large and dynamic corporate sector. Australia continues to lead in terms of market maturity and deal activity, while Vietnam and Thailand (amongst other APAC jurisdictions) offer significant growth potential, particularly in infrastructure, real estate, and technology sectors. As the market continues to evolve, private credit is poised to play an increasingly important role in supporting economic growth and development across the Asia Pacific region.