Temasek’s SeaTown Hits $1.3B Final Close for Second APAC Private Credit Fund

A unit of Singaporean government investor Temasek Holdings has reached final close for its second private credit fund targeting Asia Pacific with over $1.3 billion in capital commitments, as investors seek exposure to an asset class that has nearly doubled in size in the region over the last five years, according to Preqin.

SeaTown Holdings International, an alternative investment manager under Temasek’s asset management platform Seviora Holdings, completed the fundraise for SeaTown Private Credit Fund II (PCF II) with commitments from insurance companies, endowments, and family offices, including an unnamed “leading” Middle Eastern institutional investor.

“This milestone highlights not only the growing appetite for Asian private credit in institutional portfolios around the world but also reflects the confidence and trust in SeaTown’s approach,” SeaTown CEO Patrick Pang said in a release on Tuesday.

The closed-ended vehicle will provide highly tailored financing solutions to companies across Asia Pacific on a sector agnostic basis, and targets a net return in the mid-teens and a double-digit distribution yield over the fund’s life, according to SeaTown’s statement.

70% Deployed

PCF II launched in November 2022 as the second vintage of SeaTown’s private credit strategy after SeaTown Private Credit Fund I, which launched in December 2019 and closed with $1.2 billion in commitments. Across both vehicles, SeaTown’s private credit strategy oversees over $2.5 billion in assets under management.

The latest vehicle is already over 70 percent deployed, having utilised commitments secured from investors in earlier closes, with the portfolio currently invested across markets including Japan, Vietnam, Greater China, Australia and India, according to a SeaTown spokesperson.

“Our private credit team has demonstrated a clear ability to repeatedly source, structure, and execute complex and bespoke deals across industries,” said Pang. “We are excited to continue executing on our proven investment strategy to deliver attractive risk-adjusted returns to our investors.”

PCF II will provide structured downside protection and typically targets deal sizes of $50 million to $150 million, with potentially larger deals if its limited partners participate as co-investors, a SeaTown spokesperson told Mingtiandi.

SeaTown, which manages $4 billion of assets across private and public markets, is one of several active and alternative fund managers under the $52 billion Seviora Holdings platform, which also includes Azalea Investment Management, Fullerton Fund Management, InnoVen Capital, and Seviora Capital.

In July, SeaTown’s Private Credit Master Fund filed a winding-up petition in Hong Kong’s High Court against a unit of troubled mainland developer Guangzhou R&F Properties over unpaid principal and interest of about $614 million. That same month, SeaTown reportedly extended the maturity of part of a $165 million loan borrowed by Guangzhou-based developer Hopson Development.

Temasek Bets on Private Credit

The final close for PCF II adds to Temasek’s growing private credit footprint in Asia Pacific. Last month, Seviora agreed to take a minority stake in Asia Pacific-focused private credit fund manager ADM Capital to capitalise on opportunities in the middle market segment, which Seviora described as “underbanked and underserved.”

Temasek-backed European fund manager Tikehau Capital in April announced a partnership with Flow Capital, a Hong Kong-based private credit platform affiliated with New World Development CEO Adrian Cheng which specialises in Asia Pacific real estate debt investments. The partnership aims to explore private credit co-investment opportunities in Asia and Europe.

In February, Paris-based Tikehau and UOB-Kay Hian, the brokerage arm of Singaporean financial services firm UOB Group, announced a partnership to jointly launch an Asia Pacific private credit strategy focused on providing financing to mid-sized corporates across the region. Temasek owned a 4.5 percent interest in Tikehau as of December.

Investors Pile In

Temasek joins a growing list of investors boosting exposure to Asia Pacific-focused private credit strategies, with private debt accounting for just 4 percent of the region’s $3 trillion private assets market as of April, compared to 33 percent for private equity, according to Preqin.

Private debt fundraising in Asia Pacific reached $1 billion in the second quarter, up from $600 million raised in the first quarter, according to the data provider. Asia Pacific accounted for just 7 percent of the $1.7 trillion global private debt market as of last September.

Earlier this month, Hong Kong-based alternative investment manager Gaw Capital Partners inked a A$500 million partnership with Sydney-based real estate investment manager Ray White Capital to invest in private credit opportunities across Australia and New Zealand.

Gaw Capital’s president and managing principal Kenneth Gaw said in March that its Gateway Real Estate Fund VII, which closed on $3 billion in equity commitments last year, is pivoting towards a private debt strategy to tap growing demand for alternative debt financing in the region.

Hong Kong-based private equity firm PAG is said to be targeting $2.5 billion for its sixth Asia Pacific direct lending fund, while Los Angeles-based Ares Management in February raised A$2.6 billion for its Ares Asia Direct Lending fund, which invests in Australia and New Zealand.

In May, Goldman Sachs hit a final close for West Street Real Estate Credit Partners IV and related vehicles with over $7 billion of lending capacity to deploy globally, including in Asia Pacific. That milestone came two months after Goldman and Abu Dhabi sovereign giant Mubadala formed a $1 billion partnership to invest in Asia Pacific private debt opportunities, including real estate.

Last year, Goldman teamed up with Canada’s Ontario Municipal Employees Retirement System to invest in private credit deals across Asia Pacific, while Mubalada in 2022 formed a $1 billion partnership with KKR to invest in private credit opportunities in the region, which followed KKR’s $1.1 billion close of its inaugural Asia Pacific private credit fund earlier that year.