Asia Pacific investor interest in private debt funds is rapidly gaining recognition. However, capital raised by funds in the region is declining, according to a report by alternatives data provider Preqin.
Assets under management from private debt in APAC have grown six-fold in the past decade and 2.5-fold in the last five years to $92.9 billion as of September 2023, according to data from a Preqin report.
«Private debt has emerged as an increasingly vital component of global investors’ portfolios,» said Harsha Narayan, lead author of the report. «With its floating rate nature, the asset class is well positioned to deliver consistent income for investors in today’s high interest rate environment. While investor interest has predominantly been in North America and Europe, the Asia-Pacific (APAC) region is rapidly gaining recognition.»
Fundraising Decline
According to Preqin, there are opportunities for private debt managers in APAC as bank’s conservative lending standards often «fail to meet the diverse financing needs of many businesses» despite dominating credit provision in the region. However, there have been challenges in recent years.
From a peak of 51 APAC private debt funds closed in 2021, the industry has seen a decrease with 40 closed in 2022 and 25 closed in 2023. Aggregate capital raised by these funds has also declined from $15 billion in 2021 to $8 billion in 2022 and $5 billion in 2023.
In the first half of 2024, India and Japan-focused funds accounted for 31 percent and 29 percent, respectively, of the total region capital raised.
