Granite Asia's first private credit fund hits US$250 million
In a press release on Thursday (May 8), the multi-asset platform said that anchor investors include top Asian sovereign wealth funds, as well as Granite Asia's general partners and its network of founders and entrepreneurs.
The fund has a US$500 million target and has raised over half its targeted amount.
Ming Eng and Roger Zhang, partners, credit strategy at Granite Asia, will lead the Libra Hybrid Capital Fund.
The fund's key strategy is to offer secure loans to mid-market companies in Asia-Pacific as they scale regionally and globally. These are established businesses that are profitable or with positive cash flow with room to grow.
'It's all about scaling up the companies in this region,' Ming told The Business Times.
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Key sectors that the private credit fund will target are in consumer, business services, advanced manufacturing automation, energy transition and healthcare sectors. Granite Asia will bring the same technological and operating expertise to bear for the companies it provides debt financing as it does equity financing.
For instance, after a company has established its business in a new market, Granite Asia can help it expand by working with local financial institutions to set it up with more financing. Furthermore, this would provide an exit for the fund, which can then move on to other companies.
'Most of the time, borrowers see us as not only a capital provider, but also as a good partner to help them grow to the next level,' said Zhang.
The high investor interest in the private credit fund is a reflection of Asia's status as a growth market. Unlike more mature private credit markets where returns are in the single digits, Asia has been delivering double-digit returns as companies here grow much faster.
Even as the Federal Reserve interest rates come off a high, Asia will still provide double-digit returns, as regional companies considering private credit aim to grow at a pace exceeding the cost of capital. Investors in the Libra Hybrid Capital Fund are looking for more than just diversification.
'We do see a strong shift of mindset and capital, not only for diversification, I think people are recognising the growth,' said Ming.
The fund is riding the rise of regional capital supporting mid-market companies navigating uncertainties and global capital seeking exposure to Asian growth markets.
The deal pipeline for the fund is helped by strong market demand due to Asia being underserved by private credit. The Libra Hybrid Credit Fund has closed a few deals, with others in advanced stages.
Likening financing options to menu options at a restaurant that previously only offered pizza, the addition of a pasta offering would draw customers wanting to try the new option.
'The Asian market is an equity market in a way, but now with the growth of the private-credit market, it offers an attractive solution to a lot of companies that are looking for non-dilutive capital to fund their growth,' said Zhang.
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