Keppel Hits $300M First Closing of Third Private Credit Fund Targeting $1B

Keppel Ltd on Wednesday announced the $300 million first closing of its third private credit fund, with the Singaporean firm committing $100 million to the vehicle.

Keppel Private Credit Fund III was launched earlier this year with a target size of $1 billion, Temasek-backed Keppel said in a release. The previous Fund II achieved a $700 million final closing in 2022, with commitments from Manulife and AIMCo of Canada, the Beijing-based Asian Infrastructure Investment Bank, US asset manager GCM Grosvenor and Malaysia’s Affin Hwang Asset Management.

Keppel described Fund III’s backers as “top-tier global institutional investors”, but the firm didn’t disclose any specific limited partners.

“The top-tier investors we have attracted are a strong endorsement of the institutional quality of our platform — one that is supported by Keppel’s extensive networks and in-depth operating experience in areas such as renewable energy and core infrastructure which are part of Fund III’s sectors of focus,” said Christina Tan, CEO of fund management and chief investment officer at Keppel. “We are confident that Keppel will continue to deliver attractive risk-adjusted returns with downside protection to our investors.”

Infrastructure Focus

Fund III’s mandate is to provide loans to companies with defensive infrastructure-like operating businesses across a wide range of real asset sectors in Asia Pacific, including green energy, transport, telecom, logistics and other core infrastructure.

The first two funds in the series have committed more than $820 million to nearly 30 investments and exited half of them, delivering risk-adjusted returns in the low- to mid-teens in US dollar terms, according to Keppel.

The firm’s strategy seeks to capitalise on continued growth in APAC private credit assets under management, which quadrupled in the past decade to reach $124 billion last year but represent just 6 percent of the global market, said Stephane Delatte, CEO and chief investment officer of Keppel Credit Fund Management.

“Given that the Asia Pacific region is expected to contribute over 60 percent of global GDP growth over the next decade, there are considerable opportunities for its private credit market to expand,” said Delatte, who served as CEO of Pierfront Capital Fund Management until the firm was bought out and rebranded by Keppel last year.

Red-Hot Asset Class

Keppel’s announcement comes the same week that industrial builder and fund manager ESR revealed a $325 million fundraise for its first real estate credit strategy in South Korea, as the Hong Kong-listed group seeks to address a shortfall of financing options in Asia’s fourth-largest economy.

The latest initiative builds on ESR’s experience in European private credit and comes less than two weeks after key ESR shareholder Warburg Pincus disclosed its backing of MA Financial Group’s Australia real estate credit venture.

The Abu Dhabi Investment Authority last month revealed its commitment to alternative asset manager SC Lowy’s private credit strategy focusing on the country’s real estate sector.

Also in September, 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.