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Gaw Capital and Australia’s RW Capital Ink $325M Private Credit Partnership Down Under

2024/08/02 by Kevin He Leave a Comment

Christina Gaw

Gaw Capital Partners managing principal Christina Gaw

Gaw Capital Partners has established a A$500 million ($325 million) partnership with Sydney-based real estate investment manager Ray White Capital (RW Capital) to invest in and manage private credit opportunities across Australia and New Zealand, as the partners seek to capitalise on an asset class that has nearly doubled in size in Asia Pacific over the last five years, according to Preqin.

Hong Kong-based Gaw will partner with RW Capital through a fund under its management or separate account investments, with RW Capital responsible for originating and managing investments for the partnership, as well as providing tactical guidance.

“We are excited to partner with RW Capital to expand our presence and investment capabilities in Australia and New Zealand,” Christina Gaw, managing principal, global head of capital markets and co-chair of alternative investments at Gaw Capital Partners said in a release. “This strategic alliance allows us to combine our complementary strengths and unlock the untapped potential of private credit opportunities in these vibrant markets. As we embark on this partnership, we look forward to further exploring more exciting opportunities and delivering risk-adjusted returns for our investors.”

The partnership has already invested A$188 million in senior secured credit deals and has a pipeline of upcoming investments, according to the release.

Fourth Generation Firm

The Gaw-RW tie up comes after the Aussie firm in 2023 launched its inaugural closed-ended credit fund – RWC Real Estate Credit Fund I – which is on track to achieve a gross IRR of 19 percent per annum over a two to three year time horizon, according to the partners.

Dan White, founder of RW Capital

Dan White, founder of RW Capital

RW Capital has invested over A$5 billion in real estate private credit and equity assets across Australia and New Zealand to date, with investments spanning the logistics, residential, retail, hospitality and senior care sectors. The fund manager currently manages A$900 million of assets.

“The strategic alliance with Gaw Capital Partners is an excellent growth opportunity that demonstrates our ability to attract institutional capital for a sector we have over 20 years of experience in,” said Dan White, founder of RW Capital and managing director of Ray White Group. “The partnership with Gaw further strengthens our ability to close on attractive deals in a quick timeframe and provide comprehensive solutions for borrowers and investors.”

Established in 2001 as the family office of the heirs of Australian real estate agency entrepreneur Ray White, RW Capital became an investment manager in 2015 under the leadership of Dan White, the patriarch’s great grandson.

Growing Demand in Asia Pacific

Gaw Capital, which managed $35.4 billion of global assets as of 31 March, is establishing the partnership after the the fund manager’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 now pivoting towards a private debt strategy to tap growing demand for alternative debt financing in the region.

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“As widely known, interest rates have risen significantly and at a faster pace than anticipated. This flipped a lot of Asia Pacific markets into negative carry territory, where cashflow is lower than borrowing costs. Furthermore, cap rates have not kept pace with rising interest rates,” said Gaw.

Gaw added, “This has led to traditional buy/sell markets becoming stagnant. However, asset owners require liquidity for refinancing or other purposes, and banks are not highly liquid. As a result, private credit has emerged as a vital source of liquidity for asset owners who prefer not to sell. There is a demand for mezzanine loans and senior credit from non-bank lenders.”

Non-bank financing accounts for some 21 percent of credit in Asia Pacific, compared to 44 percent in Europe and 67 percent in the US, according to the Bank for International Settlements.

Private debt accounted for just 4 percent of Asia’s $3 trillion private assets market as of April, compared to 33 percent for private equity, according to Preqin. Asia Pacific had $124 billion of private debt assets under management as of last September, which represented only 7 percent of the $1.7 trillion global private debt market, according to the data provider.

Investors Pile In

Gaw and RW join a growing list of investors boosting exposure to Asia Pacific-focused private credit strategies. Last month, Temasek-owned asset management platform Seviora Holdings agreed to take a minority stake in Asia Pacific-focused private credit fund manager ADM Capital, while Hong Kong-based alternatives investment manager PAG is said to be targeting $2.5 billion for its sixth Asia Pacific direct lending fund.

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 and executive vice chairman Adrian Cheng which specialises in Asia Pacific real estate debt investments, with the partnership aiming to exploring private credit co-investment opportunities in Asia and Europe.

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 the close of KKR’s $1.1 billion inaugural Asia Pacific private credit fund earlier that year.

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Filed Under: Finance Tagged With: Australia, daily-sp, Gaw Capital Partners, private credit, Ray White

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