Private credit funds see surge in deal opportunities as Iran conflict disrupts IPO plans, supply chains

Private credit funds are seeing a surge in deal conversations, as the ongoing Iran conflict disrupts IPO timelines, strain supply chains and increase working capital pressures for sectors ranging from exporters to commodity-intensive manufacturers.

Delayed receivables, rising freight costs and energy price volatility are creating opportunities for structured credit providers, even as companies put off equity fundraising plans amid market uncertainty, industry executives told Moneycontrol.

“We are seeing a clear rise in inquiries but it’s about managing temporary friction, not structural distress. Elongated shipping routes and delayed receivables are trapping working capital,” said Eshwar Karra, deputy managing director at Kotak Alternate Asset Managers.

Working capital stress

Karra said logistics and supply chain businesses, along with commodity-dependent manufacturers, are emerging as key opportunity areas for private credit funds, as companies seek flexible financing solutions to absorb higher freight costs and inventory pressures.

Private credit funds are also seeing increased demand from companies which had plans to tap public markets.

“With public markets volatile, companies are naturally pushing back their IPO timelines. This has significantly driven up demand for structured pre-IPO funding and strategic bridge solutions,” Karra said.

According to him, promoter attitudes towards private credit are also changing rapidly.

“Private credit in India used to be seen as a last resort. Today, top-tier promoters view it as a sophisticated, non-dilutive tool to fund growth or exit early investors, without forcing equity dilution at compressed valuations,” he said.

While the impact of geopolitical disruptions usually transmits to corporate balance sheets with a lag, financing discussions are already picking up, Sandeep Agarwal, CEO and CIO of Modulus Alternatives Investment Managers, said.

“We do expect a noticeable increase in financing discussions over the coming quarters, particularly around working capital stress arising from delayed receivables, elevated freight costs, inventory disruptions, and energy price volatility linked to geopolitical uncertainty,” Agarwal said.

Export-oriented sectors such as chemicals, textiles, auto ancillaries, engineering goods and fertilisers are witnessing temporary cash-flow mismatches due to shipment delays and elongated customer payment cycles.

Agarwal also pointed to growing opportunities in pharmaceutical APIs, logistics, renewable supply chains and structured growth capital transactions, including recapitalisation trades in the venture ecosystem and EPC-linked funding requirements.

IPO plans on hold

On the IPO front, Agarwal said market volatility has led several companies to reconsider equity fundraising plans.

“Yes, there has been a clear increase in opportunities involving companies that were earlier planning to access public markets either for debt reduction, fresh capex, or OFS-led investor exits,” he said.

Private credit funds are also tightening underwriting standards amid concerns around cash flows, operating margins and input cost inflation.

“With input inflation and energy volatility, you have to look past historical earnings and heavily stress-test future cash flows against worst-case scenarios,” Karra said.

He added that lenders are increasingly seeking stronger downside protection through strict operational covenants, ring-fenced escrows and enhanced collateral comfort.

Agarwal added that the risk assessment remains heavily cash-flow focused, with greater emphasis on promoter commitment, covenant packages and structured downside protections. However, the focus remains on contractual safeguards rather than aggressively chasing higher yields.

Private credit goes mainstream

Executives say the Iran war uncertainty is accelerating a broader structural shift in India’s corporate financing landscape, with private credit increasingly emerging as a mainstream funding avenue alongside banks and equity markets.

“The geopolitical crisis is just accelerating a structural shift already underway,” Karra said. Private credit pipelines have evolved from basic growth capital to more complex sponsor refinancing and acquisition financing structures over the past six months.

Agarwal added that companies are prioritising “certainty of execution, speed, and customised structuring” amid volatile market conditions, strengthening the role of private credit as a strategic source of capital.