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