Investor interest in private debt funds within the Asia-Pacific (APAC) region is rapidly increasing, though the amount of capital these funds are attracting has been on the decline, according to a recent report from alternatives data provider Preqin.
Private debt assets under management in APAC have seen significant growth, increasing six-fold over the past decade and 2.5-fold in the last five years, reaching $92.9 billion as of September 2023, as highlighted by Preqin’s data.
“Private debt has become an increasingly essential part of global investors’ portfolios,” said Harsha Narayan, the lead author of the report. “The floating rate nature of this asset class positions it well to provide consistent income for investors, particularly in today’s high interest rate environment. Although investor interest has traditionally been concentrated in North America and Europe, the Asia-Pacific region is now rapidly gaining attention.”
Preqin’s report points out that private debt managers in APAC have potential opportunities due to banks’ conservative lending standards, which often fail to meet the diverse financing needs of many businesses in the region, despite banks dominating the credit provision landscape. However, the industry has faced challenges in recent years.
The number of private debt funds closed in APAC peaked at 51 in 2021 but has since declined, with 40 funds closing in 2022 and only 25 in 2023. Correspondingly, the aggregate capital raised by these funds has dropped from $15 billion in 2021 to $8 billion in 2022 and further to $5 billion in 2023.
In the first half of 2024, India and Japan-focused funds were the primary drivers of capital raising in the region, accounting for 31 percent and 29 percent of the total capital raised, respectively.
Related topics:
