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Asian private credit funds have raised the lowest amount of capital in more than a decade this year, as many investors pull back from the market over concerns about high-profile corporate bankruptcies.
While several larger investors have indicated they are willing to commit to private credit funds despite the negative stories around the asset class, most are favouring large US managers over Asian competitors.
Just five Asia-based private credit funds closed in the first half of this year, raising $1.2bn, according to data from PitchBook. That compared with 29 funds raising $9.5bn last year and 53 funds raising $20.2bn in 2022.
If funds close at the same rate in the second half, 2026 will be the quietest year for Asian private credit fundraising for at least 12 years.
The drop-off is a blow for the Asian market, which was expected to grow significantly in the coming years. It also highlights how investors still interested in private credit are favouring larger, more established fund managers amid rising concerns over the riskiness of the asset class, according to industry analysts.
“In this time of market stress, investors are relying on the big boys to deliver,” said Justin Tan, head of financial services in Asia at LEK Consulting. “There is a gravitation pull towards the larger players who have long track records — and that means the big US managers.”
While Asia’s private credit industry is much smaller and less mature than established sectors in the US and Europe, it has long been thought of as an area of huge potential.
As recently as November, the Alternative Investment Management Association predicted that Asian private credit market assets would swell by 46 per cent to $92bn between 2024 and 2027, growing at a faster rate than more developed regions. Much of the inflow was expected to come from wealthy individuals.
Sean Hung, an analyst at rating agency Moody’s, said he expected Asian investors to reduce their commitments to private credit over the next 18 months.
“Macroeconomic uncertainty, geopolitical tensions and elevated interest rates [are weighing] on investor appetite for illiquid assets,” he said.
Publicly traded private credit funds have been hit by a wave of redemptions from retail investors over the past year following the collapse of several businesses that borrowed from the funds.
Nevertheless, large investors have committed billions of dollars to the asset class, seeking to profit from the exodus of retail clients.
This month, Singapore state investor Temasek announced plans to increase its exposure to private credit from 2 per cent to 5 per cent by 2031.
“Across the board, we are still seeing reasonably good opportunities in the market,” said Alpin Mehta, head of private equity capital solutions at Temasek’s partnerships business.
The Temasek-owned alternative asset manager SeaTown International was one of several Asian groups — including Granite Asia — to close private credit funds last year.
However, fundraising in Asia has been dominated by US groups. In December, KKR closed its Asia-Pacific fund with $2.5bn of total investable capital, one of the largest in the region in recent years, according to data provider PitchBook.
Temasek’s fund business Seviora this month closed a $400mn structure known as a collateralised fund obligation with US group Churchill Asset Management to invest across the two businesses’ private credit and private equity funds. Half of the capital raised will be invested in Asia.
