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ASIA-PACIFIC
An alternative route
Asian institutional investors are increasingly
warming to the idea private debt. Could this
drive growth in alternative credit within the
region, asks Siddharth Poddar
ANALYSIS
ASIA-PACIFIC
senior vice-president for private debt at
global alternative asset manager Partners
Group. But private debt as an asset class
is really interesting for them as it provides good downside protection.
Chang agrees, saying that a few Asian
investors are beginning to invest in private
debt because of the high yield premium
they can get. Private debt is interesting to investors as its risk-return profile
sits somewhere in between public debt
and private equity, whereby it provides
a higher return vis--vis public debt but
is less risky than private equity, he adds.
Christopher Heine, head of Asia
Pacific at Intermediate Capital Group
(ICG), which is currently in the market
for its third Asia fund targeting commitments of $1 billion, says that about half
the capital the firm raised for its second
and third funds has come from LPs based
in Asia-Pacific.
In Asia, ICG invests across the capital structure and mixes debt and equity
instruments to find solutions for SMEs,
using mezzanine as one kind of means
to invest.
Australian LPs are among the more
prominent Asia-Pacific investors in private debt and Heine says their credit
appetite is increasing. The key to unlocking that capital, however, are the consultants such as Tower Watson or Mercer who
advise superfunds considering opportunities outside Australia. The countrys
Future Fund, which held A$117 billion
ASIA
PACIFIC
3%
53%
2015
20%
24%
OTHER
EUROPE
2014
NORTH AMERICA
61%
38%
1%
ANALYSIS