DBS commits $200m to Muzinich’s debut Asia fund

The fund has so far raised over $350m, with an eventual aim of deploying between $500m and $1bn in the region’s lower mid-market.

Singapore-based bank DBS has committed $200 million to the debut Asia-Pacific-focused fund launched by New York and London-headquartered fund manager Muzinich & Co, according to sources.

Sources say the Asia Pacific Private Debt I fund has now raised just over $350 million, with the remaining $150 million being committed by insurance companies, pension funds and family offices in Europe and Asia-Pacific. Muzinich has only recently begun approaching North American investors and has no commitments from that region so far. The fund has a final target of between $500 million and $1 billion.

Andrew Tan, Muzinich’s Singapore-based managing director and head of Asia-Pacific private debt, said DBS was attracted by the potential synergies arising from working with Muzinich’s global platform and Asia-Pacific-based team to provide capital solutions to companies within its network. Banks are increasingly inclined to collaborate with fund managers as they find themselves hindered by regulations from serving their small company borrower base.

Tan said Muzinich could now add DBS’s origination efforts to its own, while stressing that the fund manager made decisions on an arms-length basis and would make its own independent evaluations of opportunities brought to it by DBS.

With a focus on the lower mid-market, the fund will target companies with EBITDA of between $5 million and $50 million, typically investing between $15 million and $30 million per deal with tenors ranging from two to five years. Its core geographies are Australia, China, Hong Kong, Singapore and Indonesia, with other countries considered on an opportunistic basis. The firm has team members on the ground in Singapore, Hong Kong and Sydney.

Favoured sectors for the firm include logistics, healthcare, pharmaceuticals, technology, technology manufacturing, property services and property management. As well as primary deals, Muzinich considers buying debt on the secondary market. It also aims to capitalise on fast-growing companies by sometimes taking equity upside.