In this edition, we look at the rise and diversification of the private credit asset class; the opportunities for take-private deals, and significant PE developments from APAC.
Tamed in other markets, private credit still hot in Asia
From independently managed funds to government-backed initiatives, more and more credit funds are mushrooming in Asia, signalling how the asset class has matured delivering attractive and stable returns. The trend is, in part, driven by better covenants.
The private credit sector has grown to $1.5 trillion globally, making it the third largest alternative asset class, after hedge funds and private equity.
Non-bank loans are still 20% of the lending industry in Asia compared to 65% in the US. Against historical default rates, investors are not getting sufficient compensation in developed markets like the US, so they are looking at Asia with the hope of generating a premium.
This week, the National Investment & Infrastructure Fund announced it will raise $2 billion for India’s largest private credit vehicle. Singapore Budget 2025 also revealed its S$1 billion ($745 million) Private Credit Growth Fund, following the footsteps of Temasek and SeaTown Holdings with multi-billion US dollars in their private credit platforms.
Private credit in the region has not just expanded, it is also diversifying. Take India’s True North, which started as a private equity firm and forayed into private debt two years ago. The firm commenced its private debt business with direct lending and is understood to be looking at developing a full-fledged private credit platform.
In parallel with the exponential growth, governors in many markets are also concerned if private credit is adequately regulated. Most recently, the Australian Securities & Investments Commission (ASIC) said it will impose increased surveillance to improve transparency in the industry, including funds’ asset valuation and liquidity management practices. “Their opacity presents an outsized risk to market integrity, particularly as more investors become exposed,” ASIC chair Joe Longo said.
However, private credit firms in emerging Asia are less worried. Deals in more developed markets tend to be covenant-light, whereas in most of Asia, deal structures are bespoke and tenors are short-dated because most of the transactions are “sponsorless”, as a Singapore-based manager put it.
He added that defaults have happened in Asia, but it is more geography and sector-specific instead of pointing to industry stress.
Local governments across Asia are, at the same time, trying to create more conducive environments to attract private credit funds to operate. While Singapore has already offered tax exemption to private market funds, the country has extended its tax incentive schemes for funds until 31 December 2029.
Hong Kong also proposed changes to include private credit investments as qualifying assets under its unified fund exemption regime.
The proposed amendments “may open up possibilities for developing Hong Kong into a new hub for private credit investments and making Hong Kong-domiciled fund structures a more attractive and viable option for loan and private credit investments in the near future,” lawyers at Deacons said.
Private equity snaps up listed firms
Singapore saw at least two private equity firms proposing to delist local companies in less than two months into 2025, reflecting an appetite for take-private deals as the capital markets continued to suffer low liquidity.
The founder of ShawKwei & Partners offered to privatise PEC, a plant and terminal engineering company with over four decades of history, in a deal valued at about S$268.1 million. The filings came days after TPG proposed to take nursing home operator Econ Healthcare private in a $67-million deal on Valentine’s Day.
Should the take-private deals go through, the two companies will be joining a list of Singapore-listed companies exiting the public equities market over poor liquidity, one of the issues that the city-state’s government has been trying to tackle via tax incentives with the help of the so-called review group.
In one of Asia’s most active take-private markets like Japan, KKR announced a tender offer to delist FUJI in a deal worth about $4.4 billion, ending a months-long bidding tussle with Bain. CVC extends $288m tender offer period for Japanese marketing research firm.
Japan accounted for approximately 30% of the total private equity-backed deals in the APAC region, exceeding its five-year historical average of 21.9% in 2024, per Preqin data.
HK opens doors for FoF listings
In a move that will create an additional exit option for fund managers, the Securities and Futures Commission of Hong Kong has reaffirmed its support for closed-end alternative asset funds, including funds-of-funds, seeking a public listing in the city. A Hong Kong listing will allow alternative asset funds to tap both retail and institutional investors, providing them with additional liquidity and helping them distinguish from unlisted peers, Baker McKenzie partner Jeremy Ong said.
Top deals
General Atlantic-backed ASG Eye Hospitals is in talks to pick up a significant stake in Bavishi Eye Hospitals as platform deals like add-on acquisitions continue to be a popular growth strategy in India’s private healthcare.
I Squared Capital-backed Lightstorm raised nearly $80 million in a funding round led by NIIF Infrastructure Finance Limited, an India-based infrastructure project financier.
Aura Private Equity led a $18-million investment in the parent company of Philippine employee engagement fintech company Giftaway.
Exits
Carlyle Group’s Hexaware went public in India in an IPO that valued the software company at $5.3 billion. Carlyle sold about 21% stake in the IPO and will continue to have a controlling stake in Hexaware after listing.
Temasek-backed delivery startup Licious is planning to list next year with a target valuation of over $2 billion.
IPOs are still the preferred mode of exit for PE investors in India. After a bumper year, action is expected to continue on the bourses this year. However, it remains to be seen how many IPOs will find it easy to sustain.
Somerset Indus has exited its entire 10% stake in Hexagon Nutrition, wrapping up all investments from its first fund.
People moves
EQT’s CEO Christian Sinding, who has led the group for about six years, is passing on the baton to Per Franzén, deputy managing partner and head of private capital, Europe and North America, this May.
London-listed Ninety One has made the first hire in its Asia’s infrastructure debt team with the appointment of Kae Xiang Leong as director in Singapore where he will lead its dealmaking efforts in South and South East Asia. He formerly served as director for Clifford Capital’s client coverage group.
What to expect
Hong Kong is set to announce its Budget 2025-26 on Feb 26.
