Preqin currently tracks 130 private debt fund investors based in the Asian and Australasian regions. Representing $6.3tn in assets under management, they have an estimated $20bn allocated to various strategies under the private debt umbrella. Private debt is defined by Preqin to include funds with direct lending, distressed debt, mezzanine, special situations and venture debt strategies. This blog will shed light on the private debt fund type preferences of institutional investors in these regions.
Mezzanine vehicles are the most commonly favoured private debt fund type by number, with 67 of the 130 investors in the region demonstrating a preference for the strategy. Distressed debt and direct lending vehicles follow closely behind, with 61 and 56 investors having a preference for these strategies respectively. However, it is worthwhile to note that there is a growing preference for direct lending funds. Thirty-two Asia- and Australasia-based investors intend to commit to direct lending funds over the next 12 months, compared with 24 investors planning commitments to mezzanine funds. Distressed debt funds are targeted by 22 Asia- and Australasia-based private debt fund investors in the coming year.
Special situations funds feature among the preferences of 36 prospective investors in the region, and 13 will actively target vehicles with this strategy in the next 12 months. Of the more niche strategies, six investors in the region have expressed a preference for venture debt funds and three for private debt funds of funds. In the next 12 months, four Asia- and Australasia-based investors will target venture debt vehicles, while two will be aiming to commit to private debt funds of funds.
A relatively new segment in the world of alternative assets, the private debt asset class is still growing in prominence. Investors are always on the lookout for new ways to lock in yields and debt-specific funds represent one option that could be utilized by investors with specific yield and risk requirements.