By Heather Ng, AsianInvestor
Is Asia’s private credit market insulated from the West?
SeaTown’s Deputy CIO and Head of Private Investments, Eddie Ong, recently provided his views to AsianInvestor on this topic, shedding light on how private credit in Asia can offer meaningful insulation from the overheating conditions seen in developed market private credit, which are characterized by rising leverage levels and relatively looser lending standards.
Eddie shared that contrary to the West, where most private credit deal structures are covenant-lite and highly dependent on a borrower’s cashflow to repay the loan, the bespoke credit covenants and collateralized structures featured in Asia private credit can provide significant downside protection for investors.
“Relative to the West, Asia private credit is a less crowded investment. The pricing of private credit in Asia is still at a meaningful premium over the West and largely on a fixed rate basis, making it less vulnerable to a drop in pricing from a tapering of the fed funds rate, albeit with shorter loan maturities. In addition, features like hard collateral protection, debt incurrence and maintenance covenants, credit rating triggers, corporate and personal guarantees that are distinct in Asia private credit results in enhanced risk mitigation for Asian investors.” Eddie shared.
Read the full article by AsianInvestor here (subscription may be required): http://bit.ly/43zZyjD
By Natalie Koh, Pensions & Investments
Private equity is set for a more positive 2025, with institutional investors focusing on managers who invest in businesses that generate cash flows.
At a Seviora Group media roundtable, SeaTown’s Managing Director for Private Equity, Dickson Loo, shared his views on private markets in Asia Pacific alongside Seviora Group and Azalea Asset Management. They discussed how capital markets are opening up, and with inflation moderating and supportive interest rates, IPO opportunities are on the horizon.
“Obviously the capital markets are opening up a little bit, and I’m optimistic that with inflation moderating and interest rates (being supportive of) the stock market, this will provide IPO (opportunities),” said Dickson.
“In Southeast Asia, there are about 70 million SMEs that contribute about 45% of the region’s GDP. Having spoken to business owners in this segment for over a decade, we do see that there is a great acceptance in terms of using private equity as a source of funding,” he said.
“Therefore, I (would) say that business owners, who have been traditionally a bit more hesitant, are a lot more sophisticated, not just on the private equity side, but also on the private credit side. And this is really driving growth in this segment,” he added. “We are also quite excited about this segment. We see a lot more interest moving into the segment because there is quite a lot of dry powder looking to deploy in Southeast Asia.”
Read the full article by Pensions & Investments here (subscription may be required): www.pionline.com/alternatives/private-equity-returns-investing-cash-flow-positive-firms-say-temasek-backed-asset
The Asset, By Yuki Li
At Preqin’s Private Equity, Venture Capital & Private Debt in 2025 webinar in January 2025, our Deputy CIO and Managing Director for Private Investments, Eddie Ong, shared his insights on key trends and opportunities in Asia Pacific Private Markets.
Eddie highlighted that as developed private credit markets undergo significant shifts—marked by declining risk-free rates and narrowing credit spreads—investors are increasingly turning to Asia. Speaking to some of the unique benefits available to allocators, he explained, “In Asia, credit structures are typically more diversified, with strong credit governance and protection through hard collateral. This creates significant value for investors looking at Asia private credit from a risk-adjusted perspective.”
Read the full article by The Asset here (subscription may be required): www.theasset.com/article/53282/global-private-capital-fundraising-shrinks
AsianInvestor, by Nishtha Asthana
“As base yields decrease, the difference between the targeted returns of private credit funds and private equity funds will widen, and institutional investors might increase allocations to private equity as returns look relatively more interesting.”
In a recent interview with Nishtha Asthana of AsianInvestor, Eddie Ong, Deputy CIO and Managing Director of Private Investments at SeaTown, shared valuable insights on the evolving landscape of private equity in the face of potentially lower rates.
One highlight from the article is the growing appeal of hybrid strategies in the current environment. Such strategies, combining both credit and equity features, are gaining traction among larger asset managers.
At SeaTown, the private equity investment strategy is developed with a long-term, through-cycle focus on value and platform building that is not predicated upon interest rates.
Both income and growth are key requirements of institutional investors’ mandates. As a firm, SeaTown has both private credit and private equity solutions for investors, as both asset classes are instrumental in helping LPs achieve a balanced portfolio construction in their asset allocation to alternatives.
Read the full article here (subscription may be required): Rate cuts fuel private equity’s push into capital-intensive sectors | Alternatives | AsianInvestor
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
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