4 days ago
Private credit set to become a part of institutional investor portfolios
Private credit is set to become a part of all institutional investor portfolios globally, especially as investors seek yield in a higher interest rate, lower-beta environment, an industry veteran said.
'Over the next 5–7 years, the asset class will mature further in Asia, driven by bank's doing more plain vanilla lending, rising corporate borrowing needs, and increased investor appetite for fixed income alternatives,' Kanchan Jain, Head at Ascertis Credit Group, said.
Excerpts from an interview:
With increasing interest from GCC-based sovereigns and family offices in Asian private credit, are you seeing more opportunities for cross-regional partnerships or capital flows into your funds from the Middle East?
GCC based sovereigns and family offices have been long-time supporters of Asian and Indian strategies but of late we are seeing an increasing interest from GCC based sovereigns and family offices in Asia and India private credit strategies. They are recognising the benefit of adding private credit strategies to their portfolio and exploring the best fit for them i.e through strategic investments, fund investments, directs and/or co-investments. We are also seeing increasing conversations around cross-regional partnerships as well capital deployment at scale.
With over $1 billion deployed and four successful funds, how is Ascertis positioning its upcoming fifth fund in the current macroeconomic landscape, particularly in Asia ex-China markets?
Ascertis Credit's latest fund is being launched at a pivotal time when companies across Asia are actively seeking non-dilutive growth capital amidst tightening bank lending. The Fund operates in the high-growth, underpenetrated private credit markets of India and Singapore-SEA, offering significantly outsized returns compared to developed markets. These markets are characterized by strong growth prospects, well-entrenched market positions, and lower leverage of good size, established companies. This geographic footprint also provides strong diversification benefits away from the headwinds created through ever-shifting geopolitics and risk of slowdown in largest developed markets in the West.
The Indian economy represents one of the fastest growing large economies globally and is expected to grow at a CAGR of c. 6-7% in real terms, which translates to high teens nominal CAGR for most growing and well-established corporates with a significant need for customized capital. Beyond India, there is untapped potential in the various markets that collectively make up SEA where constituting countries have witnessed robust economic growth, reflected in their GDP expansion. A number of such companies are headquartered or have significant presence in Singapore and represent strong investment profiles. Singapore also provides a strong jurisdiction in terms of legal and creditor rights. Data from World Economic Forum suggests that over a ten-year period (2012 – 2022), ASEAN countries have accounted for 9% of global GDP growth – paralleled by the growth in the size of its banking and credit markets[1].
With a target size of $750 million to $1 billion, the fund will continue the firm's legacy of targeting high-quality, cash-generative businesses with a clear focus on capital preservation and strong governance. By leveraging macroeconomic trends—such as India's infrastructure boom, Southeast Asia's rising middle class, and the global shift towards diversified supply chains—Ascertis Credit aims to capitalize on underserved yet robust credit opportunities in the region.
India and Southeast Asia are rapidly growing credit markets but remain significantly underpenetrated. What makes these regions uniquely attractive to Ascertis, and how do you navigate the associated risks?
India and Southeast Asia offer a unique confluence of macroeconomic tailwinds, structural reforms, and demographic momentum.
India, in particular, is projected to be the world's third-largest economy by 2027, with consistent GDP growth driven by policy reforms, digital inclusion, and a thriving entrepreneurial ecosystem. In addition to its market size, India's allure lies in the strength of its financial market institutions, democratic form of governance, vast domestic market and commitment to economic reforms resulting in a steady and consistent deal flow of diverse investment opportunities across sectors. The sheer breadth and depth of opportunities available from technology and manufacturing to infrastructure and consumer goods in the Indian private credit market distinguishes it from the private credit opportunities available in other emerging economies.
The Singapore-SEA bucket focuses on the attractive deal flow of US$ transactions for Singapore-based sponsor and non-sponsor businesses that are well established with regional footprint and need bespoke non-dilutive capital for growth. Singapore serves as a financial gateway to Southeast Asia, offering regulatory stability and access to regional deal flow. Collectively, ASEAN has witnessed robust economic growth, reflected in its GDP expansion. Data from World Economic Forums suggests that over a ten-year period (2012 – 2022), ASEAN countries have accounted for 9% of global GDP growth – paralleled by the growth in the size of its banking and credit markets.
The broader geographic focus to include Singapore-SEA helps the strategy benefit from diversification, lower FX drag on account of US$ transactions, and lower withholding taxes on US dollar transactions.
Ascertis Credit addresses various risks through its proven and tested underwriting and risk management model, targeting established companies with a track record, investing via secured lending and using strong structuring mechanisms and credit enhancement features such as security, ringfencing assets, escrows and guarantees, as applicable along with strong covenants to create a strong investment profile. Our investment process is anchored in deep underwriting, ongoing monitoring, and a strong emphasis on compliance—enabling it to navigate volatility while preserving investor capital.
Ascertis Credit today manages capital for several global, marquee institutions across NA, ME and Asia, and continues to see increasing appetite for its funds on the back of the strong track record delivered by it existing funds. Ascertis Credit is committed to scaling its performing private credit platform, diversifying its offerings across tenors, sectors and geographies, and continuing to lead with its solution-oriented investment philosophy. The firm's recent launch of a short-term income fund within the performing credit fund series reflects its responsiveness to evolving investor needs, while its upcoming flagship fund reinforces its commitment to long-term, structured private credit.
With a seasoned team, proven track record, and regional depth, Ascertis Credit is poised to shape the next phase of private credit growth across Asia.
Ascertis Credit has emerged as one of Asia's leading private credit managers. What has been the core strategy behind your success over the past decade, especially in sourcing off-market opportunities?
As a pioneer and one of the longest investors' in the private performing credit investor in India, Ascertis Credit has built a reputation for delivering bespoke, risk-adjusted private credit solutions to high-growth companies in India and Southeast Asia. This source of capital is often seen to be critical in allowing existing established companies to take advantage of the strong growth prospects in their sector. The firm's success is anchored in its ability to source proprietary, off-market transactions through a unique sourcing engine of c. 500 relationships that the company has built over the years. This has been made possible by its long-standing on the ground presence in India and Singapore, deep local relationships spreading across Tier 2 and 3 cities in India, and a sector-agnostic approach focused on performance and structure over size. This approach has allowed Ascertis Credit to generate consistent and strong returns for its investors across all its funds, and provide access to high growth companies that are not accessible through public markets or typical private equity strategies. Additionally, since the underying exposure is secured debt, the return profile is much stronger and returns more reliable.
Over the 11 years, the team has raised four funds and invested over US$ 1.2 billion across portfolio companies in diversified sectors. Ascertis Credit's investment focus is on Asia ex-China, with an emphasis on India and Singapore-SE Asia, representing some of the region's fastest-growing yet underpenetrated credit capital markets.
