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Private Debt Investor held its 2022 APAC Forum in Singapore on April 13, the first in-person edition after its virtual inaugural event in 2021. The daylong summit included speakers from key LPs and GPs – such as AXA Insurance, Allianz Asia, Asian Infrastructure Investment Bank (AIIB), Pierfront Capital, and Orion Capital Asia – discussing the state of private debt in Asia, what opportunities stand out, and what’s ahead.
Here are five takeaways from the conference:
Private debt’s performance in the last two years shows that having feet on the ground in APAC is the right decision. Many large managers and institutional investors have entered into APAC’s private debt markets over the last few years, some doing so from afar and others investing in local team members or even physical offices in the region. Cultural differences between APAC and more western regions do make a difference in the private markets space, and those who have chosen to engage with the region’s markets with feet on the ground are more likely to see strong performance.
Investors across the private market space are seeking greater transparency into this inherently nontransparent asset class, and APAC is no different. Given that the region is more recently finding its footing in private debt, requests for deeper data transparency may overwhelm managers not accustomed to providing additional fund data. However, as North American and European investors stream into the geographic market, they’re likely to bring their appetites for data insights with them. If APAC’s private debt landscape can adjust to this early on, it will help to create further growth when investors realize they can access adequate transparency on their investments.
Similar to investor drive for data, if APAC private debt players can build out their technology and infrastructure sooner rather than later, it makes room for greater and faster growth. As such, private debt managers should act on the pressure to adopt technology throughout the investment lifecycle, from deal sourcing and pre-deal analysis all the way through post-deal portfolio monitoring and covenant tracking.
Exciting times appear to be ahead for APAC as its private debt markets grow and begin to gain attention on a world stage. But at the same time, it’s a young market that warrants stringent due diligence before going through with any deal. Going back to trend #1, maintaining feet on the ground in APAC will be crucial for private debt managers hoping to make strong deals and vet them accordingly.
As with investment in any asset class, APAC’s private debt market is a highly fragmented region with very different dynamics in individual sub-markets. India has seen plenty of activity and remains a sub-region with huge potential, but elements like inflationary pressures, interest rates, hedging costs, and taxation mean that deals may take more time to execute in this market.
Despite recent macro trends and global tensions, China is still a market to look at and allocate to, but experienced investors are quick to remind others to invest cautiously as its volatility presents higher risks. In Australia and New Zealand, private debt remains active and attractive, but strong competition and tight pricing, particularly driven by the region’s superannuation funds, can act as barriers to those newly looking to penetrate the market.
Global private debt markets have seen exciting performance and trends over the last few years, and APAC in particular has developed into an attractive market. For private debt managers to build on the growth and interest witnessed in APAC private debt, they’ll need to have the right technology underpinning their operations and data management, rather than relying on bare-bones solutions like Excel.
Plus, as the APAC private debt market continues to mature and more of the industry begins to adopt technology, it’s crucial to keep up with the pace of technology adoption amongst other managers and on par with investor expectations. Allvue’s Private Debt solution set is the perfect offering for private debt managers looking to implement technology into the full lifecycle of investment processes, from portfolio management to reporting to compliance.
Reach out today to learn more about how Allvue can support your team, no matter how fledgling or mature, as you take on APAC private debt.
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