Capital Goes Where It Finds Returns. Right Now, That's India

Manisha Girotra, chief executive, Moelis India, tells Ashutosh Mishra why India’s funding story is now structural, not cyclical. Edited excepts

- Ashutosh Mishra

Private credit is being described as a boom in India. What are the reasons for this?

Look, private credit is not something unique to India. It is a global phenomenon. The reason it has worked globally is fairly simple. Banks are regulated with clear constraints. Private credit funds do not have those constraints in the same way.

If a founder wants something closer to equity, that can be structured. If they want subordinated debt or a hybrid instrument, that can be structured. That flexibility on the cap table is what makes private credit attractive.

In India specifically, two things have happened. One, corporate balance sheets have cleaned up over the past decade. Two, private capex and M&As [mergers and acquisitions] have returned. Indian companies have become far more acquisitive.

So, this capital is not just refinancing. It is being used for M&A, for promoter stake changes, for restructuring shareholding. It is an alternate source of capital that founders now view as long term.

Can we say that India is finally evolving into a true buyout market?

Yes, and I think this is more because of a mindset evolution than anything else. When I started my career, selling your company voluntarily was almost unheard of. Businesses were seen as family members.

But India became a much larger economy, and that is why scale matters. If you are sub-scale in a consolidating sector, it becomes difficult to compete. Entrepreneurs have realised that monetising at the right time and consolidating can create value.