Mergermarket, ION Analytics, with Giovanni Amodeo
Chi Kit Chai, Chief Investment Officer at SeaTown, recently shared his insights with Giovanni Amodeo of ION Analytics / Mergermarket.
With a shifting macro environment and the tailwinds from ultra-low interest rates behind us, improving the operations of our portfolio companies to drive successful investment outcomes becomes more important than ever before.
Chi Kit shared how SeaTown’s private equity team adds value to its portfolio companies by helping them access our broader ecosystem in Asia – facilitating relationships and driving opportunities for resilient growth and operational efficiency.
He also believes that a buy-and-build strategy is particularly effective in ASEAN. The region’s 70 million small and medium-sized businesses and fragmented industries present a compelling opportunity to build larger platform companies by integrating complementary businesses, generating cost efficiencies and benefitting from improved economics.
Other topics included SeaTown’s approach to sustainability and ESG, what effective investor engagement looks like, the growing investor demand for private credit in Asia Pacific, and the path forward for SeaTown.
Access the full version of the interview here: https://bit.ly/3B9xnfg
EQDerivatives, by Georgia Reynolds
Our Chief Investment Officer, Chi Kit Chai, recently spoke with Georgia Reynolds from EQDerivatives about how SeaTown is developing our investment platform to meet the needs of an increasingly diverse base of global investors.
“The world has changed so much since the multi-asset fund was originally launched. SeaTown needed a new playbook for its public market offerings. Among other things, performance tailwinds from persistently low interest rates are now gone, and critical themes like geopolitics were playing a bigger role in portfolio outcomes than ever before.” Chi Kit said.
At SeaTown, our public equity investment framework is built upon the four key thematic pillars of geopolitics, innovation, socioeconomics and sustainability. We believe these themes will have an outsized influence on shaping the investment landscape of the future.
“We saw an untapped opportunity to leverage our capabilities and create new equity-focused solutions that help global allocators access alpha,” Chi Kit noted.
These developments mark a new chapter in our public market strategies, complementing SeaTown’s established expertise in private markets. With more than $4 billion in assets under management, we remain committed to delivering best-in-class alterative investment solutions to investors globally.
Read the full article here (subscription may be required): Singapore’s SeaTown Revamps Investment Platform, Launches New Equity-Focused Products
Pensions & Investments, by Natalie Koh
Exciting developments in Asia’s private credit market as fundraising, deal activity and returns have seen a steady rise. Our Deputy CIO and Managing Director, Eddie Ong, recently shared his perspective with Natalie Koh from Pensions & Investments on the unique dynamics shaping private credit across the region.
Eddie discussed how Asia’s bespoke deal structures offer greater flexibility and downside protection compared to developed markets. As he notes, “Now that the rates in the West have started to come off, Asian loans, which are largely short-dated and priced at a fixed rate, are becoming more attractive to investors.”
With $4 billion in assets under management, SeaTown recently closed its second private credit fund at over $1.3 billion, underscoring our commitment to unlocking value in this evolving asset class.
Read the full article (subscription may be required) to explore more about the private credit landscape in Asia: Private credit markets in Asia deepen as demand grows
AsianInvestor, by Hans Poulsen
Private debt is growing as an asset class in Asia Pacific (APAC). APAC private credit assets under management grew from $15.4 billion in 2014 to $92.9 billion as of September 2023, according to the latest data from Preqin.
Asset owners familiar with private credit and its risk profile see APAC private credit as a reliable form of diversification in their income allocation.
“The heterogeneity of Asia Pacific markets provides a constant source of deal flow across different countries,” Eddie Ong, our Deputy CIO and Managing Director of Private Investments told Hans Poulsen of AsianInvestor. As Harsha Narayan of Preqin noted, unlike in Europe or North America where private debt is largely focused on solutions very similar to bank loans, Asia Pacific’s markets require innovative and customised credit solutions. As such, asset managers with deep knowledge of local markets can help originate high-quality deals.
Eddie shared that discerning LPs considering investments in private credit typically focus on the downside risks of their investments, and a key concern of LPs is the complexity of enforcing loan protections and securing collateral when things go sour in a region as diverse as APAC.
SeaTown’s private credit team’s experience of being in the APAC credit markets for almost three decades, living through numerous credit crises – such as 1997, 2008, and 2020, provides comfort to investors. We believe that our ability to customize deal structures with comprehensive downside protection mechanisms enables our LPs to capitalise on the wider credit spreads in Asia, while ensuring that collateral and documentation quality is comparable to developed markets.
Read the full article here (subscription may be required): https://www.asianinvestor.net/article/private-debts-growth-in-apac-faces-key-challenges/498171
Bloomberg, by Megawati Wijaya
A unit of Singapore’s state-owned investor Temasek Holdings Pte. has raised $1.3 billion for its second private credit fund, in a sign that Asia’s fledgling direct lending industry remains attractive to investors hungry for yield and asset diversification.
SeaTown Holdings International completed the fundraising for its SeaTown Private Credit Fund II, backed by a group of limited partners including insurers, endowments, and family offices, the alternative investment firm said in a statement. The new fund also received support from an unspecified Middle Eastern institutional investor.
With the $1.2 billion secured for SeaTown Private Credit Fund I, the firm’s private credit strategy now oversees more than $2.5 billion in assets under management, the statement said.
The Singaporean firm’s funding success offers hope that the world’s $1.7 trillion private credit industry is slowly getting back on its feet after a slump earlier this year when the Federal Reserve maintained its tight policy stance amid sticky inflation. Now with the US central bank widely expected to reduce interest rates next month, direct lenders’ prospects have turned brighter, especially for those in Asia where growth has been faster given a low base.
Private debt fundraising in Asia Pacific reached $1 billion in the second quarter, up from $600 million between January and March, according to data provider Preqin Ltd. The improvement came after direct lending globally scraped the lowest level in any quarter since 2020 in the first three months of this year.
Read the full article here (subscription may be required): https://www.bloomberg.com/news/articles/2024-08-27/temasek-s-private-credit-arm-raises-1-3-billion-for-new-fund
The Business Times, by Joan Ng
Increased activity in Asia-Pacific’s private markets is creating an attractive career pathway for investment bankers, public equity managers and other finance professionals.
This trend is also generating demand for training, and pushing managers to adopt proactive talent management policies.
Our Managing Director for Private Capital, Dickson Loo, told The Business Times’ Joan Ng that the attraction of capital to the Asia-Pacific region is a major talent draw. “We have seen many overseas graduates and professionals returning to their home markets in Southeast Asia due to the potential of the different markets and investors’ interest in this region,” Dickson said.
SeaTown is dedicated to in-house training to ensure our team has the right foundation, approach, philosophy, and culture. Our commitment to fostering the next generation of leaders is exemplified by the SeaTown Sustainability Scholarship with Singapore Management University, offering a grant and an internship to sustainability majors.
Read the full article here (subscription may be required): https://www.businesstimes.com.sg/companies-markets/asias-rising-private-markets-create-demand-training-talents-seeking-edge
AsianInvestor, by Nishtha Asthana
Private credit continues to be in favor as central banks go slow on rate cuts, while rising risks and evolving strategies come into focus.
“In the Asia-Pacific market, we see private credit delivering steady mid-teens returns to investors over the longer term. This is considerably higher vis-à-vis the long term returns of public equities or bonds.”, says Eddie Ong, our Deputy CIO and Managing Director for Private Investments.
Eddie recently discussed the rising appeal of Asia’s private credit market with Nishtha Asthana at AsianInvestor.
SeaTown is seeing an increasing interest in a performing Asian private credit strategy from global investors who have traditionally deployed in developed market credit strategies.
“Given that Asia private credit AUM (assets under management) is less than $100 billion, we believe there is significant growth potential,” noted Eddie. On risks surrounding the asset class, he shared that “with its customised deal structures, assessment must look beyond simple leverage or debt service coverage ratios” and that “downside protection mechanisms and third-party guarantees are crucial in determining creditworthiness”.
Read the full article here (subscription may be required): https://www.asianinvestor.net/article/asia-private-credit-lures-global-investors-amid-risk-concerns/496934
The Business Times, by Joan Ng
Investors are showing a preference for managers with a pan-Asia focus, as reported by Joan Ng of The Business Times.
Our Deputy CIO for Private Investments, Eddie Ong shared that success in Southeast Asia requires taking a strategic approach that is tailored to the unique opportunities of the region.
Given the region’s composition of “nuanced and fragmented” economies, managers need to work on building up smaller companies and developing M&A strategies that grow their size through horizontal and/or vertical integration.
SeaTown continues to have an optimistic outlook on the region and the opportunities it presents.
“With the valuation gap between developed markets and Southeast Asia continuing to widen, we think, at some point, we will see the financial performance of companies in the region drive valuations to play catch-up, and a further boost could also come as China recovers and investors get excited again.”, Eddie says.
Read more here > https://www.businesstimes.com.sg/international/asean/few-exits-limited-investor-appetite-test-south-east-asias-pe-managers
AsianInvestor, by Nishtha Asthana
Our Deputy CIO and Managing Director for Private Investments, Eddie Ong shared his views on allocation trend towards private credit with AsianInvestor.
Asset owners may find private debt more attractive, where returns are high relative to the historical rate environment. In addition, gradual interest rate declines would benefit private debt generally.
We see clear trends of allocation of more capital towards private debt across global markets and institutional investor types compared to past portfolio compositions and a growing appetite for Asia private equity opportunities, given the depressed valuations relative to their developed market counterparts.
Private Debt Investor, by Claire Coe Smith
Our Deputy CIO and Managing Director for Private Investments, Eddie Ong, was featured in the Private Debt Investor April 2024 issue – the 18-page special report on Asia Pacific, where Claire Coe Smith covered the region’s private debt landscape.
Eddie gave his views on the attractive proposition of private credit in Southeast Asia for borrowers, as private credit investors step in as a viable alternative capital source to pressured public markets credit issuance in the region.
“Across Southeast Asia, we see equity market performance facing further uncertainty and downward pressure. This backdrop has meant companies preparing for an IPO continue to adjust their timelines for a public debut, favouring pushing it out by one to two years to ensure they can secure the best valuations. In the meantime, they require capital for growth, and that is where private credit becomes an attractive proposition. In addition, there are loans that need to be refinanced with no option of public market issuance, so borrowers are readily turning to the private market as a viable alternative capital source.”
https://www.privatedebtinvestor.com/download-the-april-2024-issue-of-private-debt-investor/
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