Private Credit Funds See Surge in Deal Opportunities Amid Iran Conflict Disruptions

Private Credit Funds See Surge in Deal Conversations Amid Iran Conflict

The ongoing Iran conflict is disrupting IPO timelines, straining supply chains, and increasing working capital pressures for sectors ranging from exporters to commodity-intensive manufacturers. As a result, private credit funds are seeing a surge in deal conversations, with industry executives noting a clear rise in inquiries for structured credit providers.

Delayed receivables, rising freight costs, and energy price volatility are creating opportunities for private credit funds to provide flexible financing solutions to companies struggling with working capital stress. Logistics and supply chain businesses, along with commodity-dependent manufacturers, are emerging as key opportunity areas for private credit funds.

According to Eshwar Karra, deputy managing director at Kotak Alternate Asset Managers, the Iran conflict is causing elongated shipping routes and delayed receivables, trapping working capital. Karra noted that private credit funds are seeing increased demand from companies that had plans to tap public markets.

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Karra also pointed out that promoter attitudes towards private credit are rapidly changing, with top-tier promoters viewing it as a sophisticated, non-dilutive tool to fund growth or exit early investors without forcing equity dilution at compressed valuations.

Sandeep Agarwal, CEO and CIO of Modulus Alternatives Investment Managers, expects 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.

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.

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Market volatility has led several companies to reconsider equity fundraising plans, with Agarwal noting a clear increase in opportunities involving companies that were earlier planning to access public markets for debt reduction, fresh capex, or OFS-led investor exits.

Private credit funds are tightening underwriting standards amid concerns around cash flows, operating margins, and input cost inflation. Lenders are increasingly seeking stronger downside protection through strict operational covenants, ring-fenced escrows, and enhanced collateral comfort.

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. Executives say 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.