SBI Mutual Fund is set to enter the private credit and unlisted equity investment space through the alternative investment fund route, targeting India's $25 billion private credit market. According to reports from The Hindu BusinessLine, the fund house was previously operating in the private credit space but had to halt operations after the RBI raised objections due to both the parent SBI and its subsidiary SBI MF operating in the same space. However, SBI MF has now provided explanations that have been accepted by the RBI, enabling the resumption of operations. The IPO-bound fund house plans to venture into the private credit and unlisted space within the next one to two months, as reported by sources close to the development.
Most fund houses operating in the private credit space through Category-II Alternative Investment Funds have delivered 14-16 percent returns, as reported by The Hindu BusinessLine. The targeted investment opportunity is designed for high net worth investors with higher risk-taking ability, with a minimum investment of ₹1 crore. SBI MF currently provides investment opportunities through Specialised Investment Fund for sophisticated investors and manages ₹3,600 crore in assets as of June-end. The fund house is also exploring real estate investments through AIFs but will take some time before a firm decision is taken.
According to Moody's Ratings report cited by The Hindu BusinessLine, India's private credit market has reached $25 billion as of December and has doubled over the last 5 years. The annual transaction value had crossed $11 billion in 2025. The venture into private credit and unlisted equity investment space will open up a new revenue stream for the country's largest fund house with an asset base of over ₹13 lakh crore. Most large fund houses have been doing roaring business in the private credit space by providing alternative debt financing to underserved mid-market companies where traditional financing often faces limitations.
In January, HDFC Asset Management Company forayed into the private credit market through new Structured Credit Fund-I with a target corpus of ₹2,500 crore, as reported by The Hindu BusinessLine. The International Finance Corporation invested about ₹220 crore as an anchor investor in Structured Credit Fund-I, which has already secured about ₹1,290 crore in commitments in its first close. AIF investments in unlisted space are also gaining momentum with mid-sized companies queuing up for stock exchange listings. AIFs pick up equity in these unlisted companies and offload them at the time of planned IPO in 2-3 years, with the expected revival in the economy boosting sentiments of mid-sized companies to hit the capital markets for raising growth capital.
