Emerging markets investment manager Ashmore has held a first close on a corporate private debt fund on more than $110 million, according to a statement.
Ashmore Emerging Markets Corporate Private Debt Fund has a target size of $250 million to $300 million and has attracted investors such as pension funds, insurance companies and family offices from North America, Europe and Asia, the firm said.
Ashmore is one of world's largest investors in emerging market corporate debt with approximately $14.4 billion invested in the sector as at 30 June 2014. Traditionally, the firm's funds have focused on investing in emerging market equities and fixed income, many of which are listed, according to the firm’s website.
The London-headquartered manager now sees the case for investing in emerging market private debt as “particularly compelling given [the] limited access to financing for many mid-size corporates… partly driven by the withdrawal of developed market banks as they de-lever their balance sheets,” the firm said in the statement.
It also stated that private debt offers attractive returns with a “significant income component” allowing long-term investors the ability to match their long-term liabilities and “benefit from lower volatility compared to the high yield market.”
Christoph Hofmann (pictured), global head of distribution at Ashmore, commented: “The disintermediation of lenders with the retrenchment and in some cases, withdrawal of many developed markets banks from the international capital markets has created a lack of access to global capital for emerging markets corporates. This has resulted in an appealing opportunity for experienced lenders in Emerging Markets Corporate Debt to step into the gap.”
Typically mid-sized corporates in emerging markets enjoy higher growth with lower leverage than their peers in developed markets, Hofmann said. As a result, Ashmore believes that there are “increasingly attractive opportunities for providers of long-term capital to achieve compelling risk-adjusted returns from lending to mid-sized corporates in Emerging Markets.”