Private credit market is a ‘big story’ in Asia though institutional investors have become selective, say industry experts

Hong Kong-based credit investment firm SC Lowy is raising a private debt fund with a target size of up to US$800 million, nearly eight times larger than its first one.

The move shows financial institutions such as SC Lowy are betting on the flourishing private debt market – in which credit is neither extended by a traditional bank nor publicly traded – to generate higher returns and bridge a funding gap amid elevated interest rates and an economic slowdown.

“Asia is really at a turning point in the private credit opportunity,” said Soo Cheon Lee, co-founder and global portfolio manager of SC Lowy, which manages about US$1.4 billion in assets. “We are just scratching the surface of that opportunity.”

Private debt assets under management in the Asia-Pacific region reached US$124 billion as of last September, according to data provider Preqin. That still represented only 7 per cent of the US$1.7 trillion global private debt market, in which the United States dominates.

Source: Trade finance