Tikehau Capital debuts APAC private credit strategy with UOB-Kay Hian partnership

February 29, 2024 (Preqin News) – French asset manager Tikehau Capital is to launch its first Asia Pacific private credit strategy in partnership with Singapore brokerage firm UOB-Kay Hian Holdings.

The two firms will each contribute an initial $50mn to the strategy, which aims to provide financing to mid-sized firms across Asia Pacific, Tikehau announced.

It said that its global institutional relationships and experience of private credit, combined with UOB-Kay Hian’s local knowledge and networks, will provide an opportunity to tap ‘sourcing and diligence channels’ in APAC, a fast-growing region whose private debt market is less developed compared with those of Europe and North America, and is expected to grow substantially.

‘As Asian markets demonstrate continued robust growth and positive structural shifts, there is an ongoing demand among mid-market businesses in the region for funding to enhance working capital and refinance existing debts,’ Antoine Flamarion and Mathieu Chabran, Co-Founders of Tikehau Capital, said in a statement.  

The strategy’s focus will be on growth, working capital, and refinancing lending to borrowers in ‘resilient and defensive industries’, according to the statement.

The APAC region comprises just 8.4% of global private credit AUM. The aggregate capital raised for APAC-focused strategies in Q4 amounted to $5.5bn for the region, compared with $12bn in Europe and $20.4bn in North America, according to the Private Debt Q4 2023: Preqin Quarterly Update.

Economic and demographic growth prospects, lack of access to flexible capital, and relatively less-developed public equity and debt capital markets are among factors that KKR says illustrate private credit’s ‘tremendous growth potential and opportunity for investors’ in APAC.

As APAC’s buyout market matures, there is a growing emphasis on leveraged buyouts, further driving the need for private credit financing, it wrote in a November report, which also stressed the value of having a physical presence in the region.

‘The region’s diversity can also be an investment challenge, with investors who have an on-the-ground presence, knowledge of local languages and cultures, deep local relationships, and market experience at an advantage over those who do not,’ it said.

Tikehau announced separately in December that it had entered ‘advanced discussions’ with Japan’s Nikko Asset Management about developing a strategic partnership in Asia, including entering into distribution agreements in Japan and elsewhere in the region.

Established in 2004, Tikehau Capital has raised 20 private credit funds, and currently has another six European vehicles in-market, according to Preqin data. The Paris-headquartered firm – which has approximately €17bn ($18.3bn) dedicated to private debt strategies – has only raised one fund outside of Europe, the US-focused Tikehau Private Debt Secondaries, which closed above target at $248mn in October 2022.

‘We look forward to the potential synergies that our combined strengths will unlock in pioneering this private credit initiative and believe that this will enable us to effectively tap into the burgeoning demand for private debt among Asia’s mid-sized enterprises,’ Bruno de Pampelonne, Executive Chairman of Asia, and Jean-Baptiste Feat, Co-Head of Asia at Tikehau Capital, said.

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