Chart of the Week: Asian private debt funds since 2008

 Asia-Pacific focused senior private debt funds are largely under-allocated in comparison to other regions of the world


Click here for a larger version

Taking a look at private debt vehicles targeting Asia-Pacific since 2008, we found that they interestingly didn’t invest into senior debt as much as their American and European counterparts. While 26 percent of the capital raised for Western countries used senior debt strategies, this share falls to only 2.9 percent for Asia-Pacific, or $365.8 million. Senior debt was ignored in favor of mezzanine and distressed debt strategies, which together equally share 95.4 percent of the total amount raised.

The data shows two dips in interest for distressed debt: one in 2009 and another in 2014. In 2014, distressed debt gathered only $300 million while the yearly average for that strategy over 2008-H1 2015 was $849 million. However, the 2015 data is encouraging with $752.7 million already raised in H1, of which $500 million were commitments made to Shoreline China Value III.

Recent data for mezzanine debt paints a different picture: while 2014 was a fruitful year for GPs with $1.6 billion raised, only $296.8 million has been raised in capital commitments during the first semester of 2015. The yearly average over the whole period is $749 million. In 2014 and H1 2015, Indian real estate raised $1.1 billion of mezzanine private debt capital.

Western fund managers raised 52.4 percent of the total capital, with US fund managers alone representing $3.9 billion. Notably, Oaktree Capital Management’s joint venture with China Cinda Asset Management targeted $1 billion to invest into distressed opportunities in China.