Asian private credit players rush to bridge funding gap at SMEs and in sectors like education, technology

Private credit is an important financing tool for mid-market firms that cannot get bank financing or sell bonds or equity in public markets - HSBC’s APAC private credit head

The technology sector is also catching the fancy of private credit players as public markets become hesitant about the industry amid high demand for capital.

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Published: 7:30am, 15 Feb 2024

Asia accounts for roughly 40 per cent of global gross domestic product, 70 per cent of global economic growth and 60 per cent of the world’s population, and yet receives only about 5.5 per cent of the US$1.5 trillion allocated to private credit markets globally.

It is this opportunity that is luring investment firms such as BlackRock, the world’s largest asset manager, and banks like HSBC and Bank of Singapore to rush in and bridge a funding gap, after identifying small and medium-sized enterprises (SMEs), education and technology sectors, as areas of focuse.

“Outsized demand for capital driven by the region’s strong economic and demographic growth is met with limited supply due to the pullback in bank lending and limited public markets options,” said Celia Yan, head of APAC private credit at BlackRock. “With these changes, companies are increasingly shifting to private credit that can provide flexible, alternative funding solutions.”