US-headquartered private credit fund, Muzinich & Co, has announced via a media note the final close of its Asia Pacific Private Debt I Fund, at $500 million.
The fund targets opportunities in the core and lower-middle market across Apac and is today around 35-40% deployed through eight closed investments, Muzinich & Co CEO and head of Apac private debt, Andrew Tan, told FinanceAsia. He added that the fund is targetting returns in the “low to mid-teens.”
Tan earlier told FA that the firm was aiming for a close by end of June and, as of April, the fund had deployed $180 million across seven investments in Australia, India and Hong Kong.
Muzinich Asia Pacific Private Debt I Fund was launched in 2021 with around $200 million in seed capital from Singapore’s DBS Bank. Other limited partners (LPs) include European pension funds and insurance companies.
The strategy is declared a Sustainable Finance Disclosure Regulation (SFDR) Article 8 fund, a label that indicates adherence to environmental or social considerations. It uses a proprietary ESG scorecard to evaluate borrowers’ ESG credentials.
Tan noted the asset class’s ability to offer investors attractive cash interest returns and portfolio protection amid higher rates and market volatility. He noted private credit’s floating rate nature and the defensive characteristics offered through exposure to senior-secured debt, which puts investors at the top of payment priority, compared to equity, high-yield or junior lending.
“Asia Pacific private debt in particular allows investors not just diversification benefits, but also an ability to access a region with optimistic growth prospects especially in the lower-to-core middle market, which is particularly underserved from a funding perspective. This is where our strategy is focussed.”
Globally, private credit has grown from a $500 billion market in 2015 to $1.4 trillion today and it is expected to breach $2.3 trillion by 2027, according to Preqin.
George Muzinich, who founded the firm in 1988 and serves as executive chair, noted the potential for private credit to grow significantly in the region. In the release, he said: “Private debt is well-established in the US and Europe, while in Asia it has the potential for exponential growth in a market that is less crowded than its US and European counterparts.”
According to Preqin data cited by Singapore’s central bank, the Asian region accounts for only $90 billion of the global sector total, as of June 2022.
Muzinich has offices across Singapore, Hong Kong and Australia.
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