On the same day that is completed an acquisition of a half-stake in a Temasek-backed alternative lender, Keppel Capital has committed $100 million to the real asset-focused fund manager’s latest debt vehicle.
The fund management division of Singapore’s Keppel Corp contributed half of the cash that enabled Pierfront Capital to reach a $200 million first close on its second Asia Pacific-focused credit fund, according to an announcement today by the Singapore non-bank lender.
That commitment to Keppel-Pierfront Private Credit Fund has been matched by a further $100 million from Pierfront’s first credit vehicle – Pierfront Capital Mezzanine Fund – which is held jointly by Singapore wealth fund Temasek and Japan’s Sumitomo Mitsui Banking Corporation, according to the non-bank lender.
Pierfront confirmed to Mingtiandi that its latest private credit vehicle, which is currently targeting a number of seed assets, is aiming for a final close of $600 million, with a hard cap of $750 million.
The fund aims to lend to real asset initiatives across Asia Pacific including infrastructure, real estate, energy, and offshore marine where “financing needs are not met by traditional commercial banks”.
Tapping into Increasing Demand for Debt
“Private debt is a growing asset class, particularly in today’s environment in Asia Pacific, where we have observed considerable demand for alternative lending solutions to meet capital needs of corporates and projects in real asset sectors, arising from the structural tightening of traditional bank lending in select markets,” said Keppel Capital’s CEO Christina Tan.
Tan added that Keppel Capital, which has $33 billion in assets under management across a portfolio that includes real estate, data centres, and infrastructure, will add value to Pierfront Capital’s deal-sourcing networks.
Pierfront’s CEO and CIO Stephane Delatte said that the “long-term strategic partnership” with Keppel would give the firm a “positive bearing on our real asset investment focus given its extensive networks and in-depth operating experience in our sectors of focus”.
Tying Up with an Institutionally Backed Lender
In a separate announcement, Keppel Capital said yesterday that it had completed its acquisition of a half-stake in Pierfront for $7.8 million.
Keppel has tied up with the non-bank lender after it made over $400 million in investments globally across private credit, mezzanine and structured financing over the past five years.
With Temasek holding a 91 percent stake and Sumitomo Mitsui the remainder in the company’s Pierfront Capital Mezzanine Fund, Pierfront is already leveraging institutional capital and networks across Asia Pacific.
Just three months ago, the fund invested $50 million in a term loan facility to pan-Asian data centre owner and operator ChinData Group, which has a portfolio of campus-style hyperscale data centres in China, India, and Malaysia.
A month before that deal, the vehicle loaned $33 million to Elite UK Commercial Holdings to support the acquisition of a UK-wide portfolio of 97 regional offices known as the Hayhill Portfolio.
Pierfront operates as an independent company under Singapore government-backed finance provider Clifford Capital, which is 40.5 percent owned by Temasek, while Prudential holds another 20 percent. Sumitomo Mitsui, DBS, Standard Chartered and Manulife each hold stakes of just under 10 percent.
Following a Debt Strategy
Intending to capture the growing potential of alternative lending, Keppel is making its move at the same time as compatriot ARA Asset Management has made inroads into the asset class.
Just last week, the Warburg Pincus-backed fund manager announced that it had taken a majority stake in London-based non-bank lender Venn Partners LLP for an undisclosed sum.
ARA is providing cornerstone investment and working capital to drive the expansion of ARA Venn, which currently has £5 billion in assets under management, into real estate-backed credit markets in Europe, as well as other geographies in the future.