Global private debt managers home in on Asia Pacific

Regional investors are ramping up allocations to the asset class as an alternative to the more volatile public markets.

Several fund managers have expanded their Asia-Pacific footprint recently, looking to the region for both capital-deployment opportunities and local investors eager to commit capital in non-Asia markets.

THL Credit Advisors, GoldenTree Asset Management and Varde Partners have made hires and opened new shops, while Bain Capital has raised over $500 million its first Asia-focused special situations credit vehicle.

THL Credit is looking for fundraising opportunities in the region, especially targeting Australian pension funds interested in direct lending opportunities in the US. These Australian retirement plans, or superannuation funds, benefit from a high mandated saving rate for pensioners, boosting the size of their balance sheets. Investment opportunities within Australia, however, are limited relative to the size of these funds.

“Superannuation Funds have to work harder and look abroad for additional attractive assets,” said Mike Herzig, a managing director at THL Credit and head of business development for the firm’s direct lending tradeable credit platforms.

These funds “look to private debt in the US with the hopes of clearing that hurdle just in coupon”, while at the same time diversifying their exposure beyond local real estate and traditional asset classes like high yield bonds, where valuations may be stretched, he explained.

THL Credit recently hired Mike Backwell, who was previously at Credit Suisse, as its Australia and New Zealand representative to build relationships for funds and separately managed accounts in the firm’s direct lending and tradable credit strategies, the company said earlier this month. THL Credit has worked with Australian investors in private debt since 2013.

Additionally, GoldenTree announced earlier this month it had hired Russell Taylor, formerly of JPMorgan, to lead its newly opened office in Sydney, according to a statement. It represents the second location in the area since 2014 when it opened in Singapore.

Other debt fund managers are looking beyond raising capital in the region and towards investing capital in Asian markets.

Varde announced this month a partnership with Singapore-based Indies Capital Partners to invest in private debt opportunities across Indonesia. Bain Capital recently closed its Special Situations Asia fund on $556.89 million, garnering capital from 38 investors, a filing with the US Securities and Exchange Commission showed.

About 7 percent, or roughly $18.93 billion, of the $270.41 billion in total capital private debt funds had ready to deploy in the market as of 30 June was slated for Asia-Pacific region specifically, according to PDI data.

GoldenTree and Bain Capital did not respond to requests for comment, while a Varde spokeswoman declined to comment.