ADIA Backs SC Lowy’s South Korean Real Estate Private Credit Fund

The Abu Dhabi Investment Authority has made a commitment to alternative asset manager SC Lowy’s South Korean private credit strategy focusing on the real estate sector, the parties announced Tuesday.

The fund will provide real estate credit to developers, construction firms and domestic financial institutions in South Korea, SC Lowy said in a release. Primarily targeting senior secured lending for residential, commercial and logistics projects in major cities, the fund aims to bridge the financing gaps left by traditional lenders, according to the Hong Kong-based firm.

Real estate private credit is growing rapidly in South Korea, said Mohamed Al Qubaisi, executive director of the real estate department at Mideast sovereign fund ADIA, which is nearing $1 trillion in assets under management.

“This commitment aligns with our strategy of supporting differentiated private real estate credit platforms alongside partners with established track records and strong market access,” Al Qubaisi said.

Opportunities in Distress

Korean brokerage firms have been seeking to raise more than KRW 1.7 trillion ($1.2 billion) in private equity funds to bet on soured property loans amid prospects of accelerated restructuring of project finance debt, according to the Korea Economic Daily.

Financial authorities expect about KRW 2 trillion — or between 5 and 10 percent of the estimated KRW 23 trillion in outstanding project finance loans in South Korea — to be restructured this year, KED reported in May.

The SC Lowy private credit fund will employ a rigorous underwriting process to identify and capitalise on high-quality opportunities, the firm said.

“This fund presents an opportunity to address the growing demand for private credit in South Korea’s real estate sector,” said Soo Cheon Lee, chief investment officer at SC Lowy, which has $1.6 billion in assets under management.

Debt Strategies Take Off

Private credit as an asset class has nearly doubled in size in Asia Pacific over the last five years, according to data provider Preqin.

In August, SeaTown Holdings International, an alternative investment unit of Singapore’s Temasek Holdings, reached a final close of its second private credit fund targeting APAC with over $1.3 billion in capital commitments.

Orion3, a fund manager backed by Li Ka-shing’s CK Asset Holdings, teamed with Manhattan-based Muzinich & Co on an infrastructure and real assets private debt strategy targeting a size of between $500 million and $1 billion, the partners announced earlier this month.

The Orion3 vehicle has raised more than $120 million in seed capital and will initially focus on debt financing and capital solutions for middle-market infrastructure and real asset firms in Australia, Singapore, South Korea, Japan, Hong Kong, Britain and Canada.