Preqin’s Private Debt Online service tracks 36 private debt funds currently in market that incorporate Asia or Australasia as part of their investment strategy. These funds are targeting over $24bn in aggregate capital; almost two-thirds have a sole focus on Australasia or Asia. This blog will examine the 10 largest private debt oriented vehicles currently in market targeting only these regions.
Funds in Market
The largest fund in market targeting either Australasia or Asia is ICG Asia Pacific Fund III, which is looking to raise $1bn and will invest in Asian markets. Managed by Intermediate Capital Group, it makes direct mezzanine investments in mid-market leveraged buyouts as well as acquiring senior debt and mezzanine loans in the secondary debt market. The second largest fund on the list is Kohlberg Kravis Roberts' India Alternative Credit Opportunities Fund. The fund is a $750mn mezzanine vehicle that will invest in credit opportunities within India. It is one of the first funds approved by the Security and Exchange Board of India to receive commitments from domestic and foreign investors. The third largest Asia- or Australasia-focused private debt fund in market is ADV Opportunities Fund I. Currently targeting $500mn, it focuses on mid-size special situations and turnaround deals within India, China and other Asian markets. Also set to raise $500mn, Shoreline China Value III will target distressed securities of companies operating in China. Another vehicle looking to raise $500mn is SkyPath Arrow Fund. The maiden vehicle of SkyPath Capital Partners plans to invest in Australia- and Asia-based companies in need of special situations, distressed and turnaround capital.
The remaining five funds in this group are led by $300mn fund, Olympus Capital Asia Credit I. It focuses on direct lending opportunities within Southeast Asia, India, Australia, and on a selective basis, North Asia. Recently achieving a first close, Nomura ICG Japan Fund has a target of JPY 30bn ($250mn) and is adopting mezzanine debt strategies within Japan. Tokio Marine Mezzanine Fund, a JPY 30bn mezzanine vehicle with a focus on Japanese markets, is due to reach a final close soon. With a strong focus on China, Abax Asian Structured Credit Fund II will provide $250mn in direct lending capital to credit-worthy enterprises that are under-served by the conventional banking system in Asia. The final private debt fund on this top 10 list is Mizuho Capital Parthers’ Mezzanine Fund No.3; it is set to provide mezzanine financing to small and medium-sized enterprises in Japan.
With half of the 10 largest Australasia- or Asia-focused debt vehicles adopting the mezzanine strategy, this appears to be the most preferred financing method for funds targeting investment in these regions, followed by distressed debt. Direct lending vehicles represent two of the top 10 funds in this list. Although a relatively new class within alternative assets, private debt-oriented funds are gaining popularity within the region and may see larger target amounts in the future.