Bain Capital's special situations team says India's financing landscape is shifting in a way that is making hybrid capital more mainstream, as companies and promoters search for alternatives to conventional bank loans. Sarit Chopra, a partner with the Boston-based private equity group, said there is now a wider acceptance of hybrid structures because the market has fewer easy options for large, flexible funding needs.
The trend is being reinforced by a growing range of transactions that do not fit neatly into standard corporate lending. These include funding for cross-border mergers and acquisitions by Indian companies, financing for business carve-outs, and capital solutions for promoters seeking to deleverage balance sheets. In each case, borrowers often need instruments that sit between debt and equity, offering flexibility on repayment, structure and risk-sharing.
Funding Gap Widens
Chopra's comments point to a broader reality in India's credit market: banks remain central, but they are not always the best fit for complex or time-sensitive financing requirements. Regulatory constraints, sector-specific risk limits and the need for speed can make traditional lending too rigid for transactions that require bespoke capital. That gap has created room for private capital providers to step in with hybrid solutions that can be tailored to the borrower's cash flows and strategic objectives.
For companies pursuing acquisitions overseas, the need is especially acute. Cross-border deals often require quick execution, larger ticket sizes and structures that can bridge valuation differences or post-closing integration risks. Similarly, carve-outs can leave a business needing transitional capital while it separates operations, establishes standalone systems and stabilises earnings. Hybrid capital can provide that bridge without forcing immediate dilution or overburdening the balance sheet with senior debt.
Special Situations Momentum
Bain Capital's special situations platform has become one of the clearest beneficiaries of this shift. The team has deployed $1.2 billion in calendar 2026 and is aiming to sustain momentum at roughly $1 billion a year, underscoring both the scale of opportunity and the depth of demand. That pace suggests the firm sees India as a market where special situations investing is moving from opportunistic to structural.
The appeal for investors lies in the combination of complexity and scarcity. Special situations capital can command attractive returns when it is deployed into transactions that require speed, creativity and a high degree of structuring expertise. For borrowers, the attraction is access to capital that may be unavailable from banks or too dilutive from equity markets. The result is a financing channel that is increasingly relevant for companies navigating expansion, restructuring or ownership transitions.
Chopra's assessment also reflects a broader evolution in how Indian corporates think about capital. As businesses become more global, more acquisitive and more willing to separate non-core assets, the need for financing tools beyond plain-vanilla term loans has increased. Hybrid capital, once viewed as a niche or last-resort option, is now being considered earlier in the process, particularly by promoters who want to preserve control while improving leverage metrics.
New Deal Structures Emerge
The rise of hybrid capital is also being shaped by the changing behaviour of India Inc. Many companies are no longer seeking financing only to cover working capital or refinance existing debt. They are using capital to pursue strategic moves that can reshape their portfolios, enter new markets or unlock value from underused assets. That shift naturally favours investors who can underwrite complexity rather than simply provide balance-sheet lending.
At the same time, the market is becoming more receptive to non-traditional capital because the cost of waiting can be high. In a competitive environment, companies that can secure flexible financing quickly may be better positioned to close acquisitions, complete separations or reduce leverage before market conditions tighten further. That urgency is helping normalise hybrid structures across a wider set of borrowers.
For Bain Capital, the opportunity appears to be expanding rather than narrowing. The firm's deployment pace and Chopra's comments suggest that special situations capital is increasingly being used not just as rescue financing, but as strategic capital for growth and transformation. In India's evolving credit market, that may prove to be the defining feature of the next cycle: not a shortage of capital, but a shortage of capital that is flexible enough to match the deal.