Private credit in the Asia Pacific (APAC) region is rapidly gaining traction, fuelled by increasing demand for alternative financing solutions and underpenetrated markets. This presents an attractive opportunity for investors to access premium returns while supporting the region’s dynamic economic growth and innovation.

We observe several drivers behind the growing prominence of this asset class:

• Compelling demand-driven factors: APAC's capital-intensive industries and SMEs face financing challenges due to higher credit risks and limited options. Growing infrastructure needs, fragmented ESG standards, and banks' rigidity create opportunities for private credit to bridge critical financing gaps.
• Encouraging supply-driven factors: The growth of APAC private credit is fuelled by its under penetration compared to US and EU markets, increasing constraints on banks to lend, rising institutional participation, better lender covenants, FinTech platforms warming markets to alternative lenders, and regulatory movements encouraging expansion in alternative financing.
• Availability to tailor financing solutions: The asset class provides the flexibility to align business financing solutions with various factors, complementing traditional bank metrics. With its speed and adaptability, the demand for private credit continues to rise.
• Diversification: Private credit enhances portfolio diversification by focusing on borrower-specific metrics such as cash flow and collateral rather than the broader macro environment. This approach reduces volatility and correlation with traditional public equity markets.

This paper aims to answer whether the yield pick-up in Asian private credit is worth the risk, focusing on the region's underpenetrated markets, borrower-specific metrics, reduced reliance on macro factors, and increasing institutional participation.

Across Seviora Group our asset management companies (AMCs) manage a variety of strategies to tap into the growing profile of private credit across the Asia Pacific.

This paper will identify three different approaches to private credit in Asia Pacific. The three could be thought of as the Small, Medium and Large approaches to the strategy in the region, each encapsulating a variety of risk factors and tolerances.

Our various AMCs have successfully navigated the private credit space, through smaller strategies such as venture debt, spearheaded by InnoVen Capital, mid-market SME financing through our strategic partner ADM Capital and through larger APAC corporate focused private credit strategies via SeaTown.

InnoVen Capital: Driving Innovation with Venture Debt

This funding addresses the needs of PE/VC backed high-growth startups, with non-dilutive capital. This strategy supports APAC’s vibrant tech ecosystem, while delivering attractive returns for investors.

ADM Capital: Expertise and ESG Integration at the Forefront

With decades of experience and deep local relationships to unlock value in diverse APAC markets, their strong governance structures and ESG integration provide sustainable, high-quality returns while supporting economic growth and environmental resilience.

SeaTown Holdings International: Proven Risk Management and Superior Returns

A focus on larger Asian corporate opportunities while maximising cash flow yield and downside protection. Their access to unique deal flow, robust risk management, and innovative structuring are a cornerstone of their offering.

Read more in our Asian Private Credit Macro Insight.