India Private Credit: Will International LPs Allocate?

The core question is straightforward: Why allocate to India when developed markets offer comparable returns with larger, more established borrowers?

Add to that:

• INR / USD depreciation
• Withholding tax
• Fees, carry, and operating costs

After adjusting for all of this, Indian direct lending often delivers only ~10-11% USD net returns. So why should global LPs care?

Our answer: They already do - and allocations will only increase. Maybe not right away, but eventually. The largest and longest-standing domestic managers in India like EAAA Alternates, Kotak Alternates and Ascertis are already meaningfully allocated by international LPs. Beyond delivering performance, they have all focused on building credibility and institutional framework over 15-20 years. Nothing comes easy and nothing comes in a hurry.

A clarification. International managers like KKR, Varde, Oaktree, Farallon, Cerberus etc already receive meaningful international LP allocations to their Asia credit funds, where India typically remains less than 20-25% of the pool. This piece is about domestic managers and India-dedicated funds - a very different fundraising journey and a very different value proposition.

One concession worth making upfront. Most Asia-level allocations, and even most India-level allocations within them, have flowed into distressed, special situations and higher-yield strategies - not vanilla direct lending. That is the honest picture today. But the time for performing credit and direct lending will come too. India risk is becoming more and more acceptable to international LPs, and as that trust deepens, allocations will start to extend down the risk curve into the steadier, lower-return strategies as well. The shift is already visible at the higher-yield end of performing credit - both EAAA and Ascertis have started winning international LP allocations into those strategies. The trend has begun.

Logically, why the India risk and return should still work:

• India is now one of the top four economies globally.
• China is slowing structurally. India continues to compound. Policy-led initiatives of the Indian Government - we see a very strong impetus in mid-market, and its impact on a few manufacturing sectors - are allowing Indian mid-market in core manufacturing and services to grow at 20-25%+.
• Credit demand in India is expanding faster than bank balance sheets. The opportunity here is not led by LBOs (as in the US) but meaningfully by growth financing. The reasons are structural.
• The opportunity is multi-cycle, not vintage-specific.

The real edge is not yield arbitrage. It is early relationship-building with trusted India-focused managers. LPs trying to time a single vintage may miss the point. Indian private credit is a long-duration allocation decision, not a one-off return trade. Those who start early get access, alignment, and learning curves that matter over decades.

We at True North Private Credit remain determined to build an institutional platform over the next few decades, to attract international institutional capital meaningfully alongside our domestic fundraising franchise. Right now, it is 20% domestic insurance money, the rest HNI/UHNI capital. Credibility and track record are still being built. Our faith remains that allocations start to turn in your favour when a couple of funds have returned the money fully and shown full exits with promised returns. Of course, clear conflict policies, team alignment with proper carry, stability of team, and allocating resources to the platform remain core to institutional building - without which neither domestic institutional capital nor international capital will come.

Parting line: if SOFR moves down by 200 basis points, driving down international private credit yields, that becomes an additional tailwind for Indian allocations in private credit from potential international LPs.