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Private-credit funds retune strategy as acquisition financing set to open up for banks

29 May 2026

This is a link-enhanced version of an article that first appeared in VC Circle

Article Overview:

The article discusses the Reserve Bank of India’s move to allow banks to finance strategic acquisitions and its potential impact on the private credit market. It highlights how increased bank participation in conventional acquisition financing may compress private credit returns in standard deals, while simultaneously driving private credit funds towards more structured and complex opportunities. The story further notes that private funds are expected to continue finding opportunities in sponsor-led financing, leveraged recapitalisations, structured transactions, and sub-₹500 crore deals.

Our Partner, Ameya Khandge, shared his perspective. Here’s what he had to say:

“Deals originally underwritten at 13 to 18% IRRs can be taken out by bank refinancing once the target stabilises, compressing realised IRRs below underwritten levels. This impacts the duration and yield realisation of existing portfolios.” 

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