Motilal Oswal Alternates launches first private credit fund

Motilal Oswal Alternates has entered the fast-growing retail credit market and initiated regulatory processes to launch its private credit division. The first fund proposes to raise ₹3,000 crore, including the green shoe option of ₹1,500 crore, a company statement said.“India’s private credit market is a relatively mature asset class and growing rapidly. Mid-market companies with strong operating results are looking for flexible, non-dilutive growth capital that suits their financial needs,” said Rakshat Kapoor, Head of Private Credit at Motilal Oswal Alternates.

The fund, which is currently awaiting regulatory approval, has filed its prospectus with Sebi and will begin active marketing once the approvals are granted.

The fund will raise capital from both domestic and foreign investors, including UHNIs, family offices and institutional investors, supported by structures that enable global LP participation. The fund expects to generate returns through a combination of regular fixed contracted returns and/or returns linked to stock performance, the fund said.

“The private credit sector will have synergies with our existing businesses and will build on Motilal Oswal Group’s existing strength and extensive knowledge base. Overall, we are very excited to enter this already vibrant and fast-growing asset class,” said Vishal Tulsyan, Executive Chairman of Motilal Oswal Alternates.

Motilal Oswal’s first private credit vehicle will focus on two strategies: growth capital and disrupted credit. The growth capital segment will focus on companies with strong operational performance that require non-dilutive capital to scale. Key sectors include core engineering, manufacturing, auto components, healthcare, pharmaceuticals and other core activities of the economy, Kapoor told ET. The second category, disrupted credits, will consist of fundamentally sound companies facing short-term cyclical pressures. “We don’t look at distressed assets,” he said. “But good companies that are at an inflection point, or companies that are experiencing temporary disruption, are largely within our scope.”

The fund targets a return profile of 20%, with typical deal sizes of ₹250 to 400 crore. Kapoor believes the timing is favorable as banks have tightened long-term lending and are increasingly focusing on higher quality credits, leaving a significant funding gap for mid-market and growth-oriented companies. “India is a $4 trillion economy with only a $20 billion private credit sector,” he said. “There is plenty of room for scaled domestic platforms like ours,” he said.