Insights – Key takeaways from APLMA Private Credit Conference 2024
We provide our key takeaways from the sessions conducted at the APLMA Private Credit Conference 2024 held in Singapore at Marina Bay Sands on 6 June 2024.
Presentation: Market overview
Rapid growth in private credit in Asia. 4-5x growth in last 6 years. Market size in 2023 at US$82 billion AUM
Banks increasingly focused on private credit with balance sheet allocated or entering strategic tie up with fund managers
Private credit relatively small in Asia compared to syndicated loan and bond market, especially compared to US and Europe
Private credit facing more scrutiny from regulators
Panel 1: Lenders’ perspective and insights
Current opportunity: Primarily in sponsor buyout, uni-tranche and junior debt financing. Higher base rates (higher for longer thesis) and market need for providers of flexible capital (e.g. terms relating to lending to opco/holdco, senior/junior, PIK and PIYC structures) is driving demand
Challenges: Lot of competition with new fund launches, macro uncertainty and weakening deal documentation
Keys to building private credit franchise: Asia is collection of different markets with different legal regimes, different FX and cultures. Having local boots on the ground and localised infrastructure (e.g. local licenses, local entities, local teams with expertise across origination and restructuring) and good governance is key (e.g. monitoring framework, mark to market practices and transparency with investors)
Panel 2: Sponsors’ perspective and insights
Factors driving growth in private credit: Not purely related to pricing. Attractiveness of total package, balancing pricing, leverage, flexible terms on no amortisation, capitalise interest, covenants and other restrictions gives sponsor downside protection for risks. Sponsors open to pay for flexibility
Growth area: In the performing direct lending space, following and backing GPs around the region on M&A deals in new markets such as India
About APLMA
The Asia Pacific Loan Market Association (“APLMA”) was founded in 1998 to promote growth, liquidity and best practice in the loan markets in Asia Pacific.
The membership has grown to over 400 institutions and now includes banks, non-bank financial institutions, law firms, insurers, government and rating agencies as well as data and other service providers.
