Temasek Bets on Asia Private Credit with Stake in Hong Kong’s ADM Capital

A unit of Temasek has agreed to take a minority stake in Asia Pacific-focused private credit fund manager ADM Capital, as the Singaporean state-owned investment giant adds exposure to an asset class that has nearly doubled in size in the region over the last five years, according to Preqin.

Along with the equity acquisition, Seviora Holdings, a Singapore-based asset management platform wholly owned by Temasek, is partnering with Hong Kong-based ADM to offer a broader range of products across the private credit spectrum, with a focus on middle market opportunities.

“We are always on the lookout for unique and compelling opportunities to expand our product suite and capabilities,” Seviora Holdings chief executive Jimmy Phoon said in a release on Monday. “With the private credit landscape in Asia growing rapidly, Seviora has been actively seeking opportunities to invest in asset managers that add scale and expertise to our private credit franchise.”

The transaction is expected to complete in the fourth quarter, pending regulatory approvals and other business conditions. Financial terms of the investment were not disclosed.

Middle Market Focus

The tie-up with ADM comes as Seviora seeks to expand its private credit business in Asia Pacific, including the middle market segment, which the investment manager described as “underbanked and underserved.” The partners also aim to work together to expand ADM’s existing sustainability-integrated investment strategy for mid-market corporates.

“We are delighted to partner with Seviora to continue to scale our offering and engage with the vast market opportunity ahead,” said ADM Capital founding partner Christopher Botsford. “Culturally the teams are closely aligned, with innovation being a priority.”

Established in 1998, ADM Capital provides structured credit solutions in Asia Pacific. The fund manager has additional offices in Singapore and Bangalore and currently manages $1.7 billion of assets, with over $6 billion invested across 220 loans since inception.

Upon completion of the partnership, ADM will join Seviora’s platform of investment managers focused on active and alternatives strategies in Asia Pacific, which include Azalea Investment Management, Fullerton Fund Management, InnoVen Capital, Seatown Holdings International and Seviora Capital. Seviora currently manages $52 billion of assets across public and private markets.

The partnership adds to Temasek’s growing private credit footprint in Asia Pacific. The investment giant owns a 4.5 percent stake in Paris-based alternatives fund manager Tikehau Capital.

Private Credit Gathers Steam

Seviora’s partnership with ADM moves come amid a flurry of fundraising for Asia Pacific-focused private credit strategies by global institutional investors seeking to profit from growing demand for alternative debt financing in the region, with non-bank financing accounting for 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 logged $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.

“APAC accounts for one third of global GDP and two thirds of incremental global growth, yet only 7 percent of global private credit assets is located in the region. This underscores the magnitude of private credit investment opportunities in this market, and we are excited to bring greater access for our and Seviora’s clients,” said Botsford.

In May, Goldman Sachs hit 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 close came two months after Goldman and Abu Dhabi sovereign giant Mubadala formed a $1 billion partnership to invest in private debt opportunities across Asia Pacific, 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.

Hong Kong-based alternatives fund managers are also raising their bets on private credit. PAG is said to be targeting $2.5 billion for its sixth Asia Pacific direct lending fund, while Gaw Capital said its Gateway Real Estate Fund VII, which closed on $3 billion in equity commitments last year, is now pivoting towards a private debt strategy.

Shift to India

Separately, Temasek has revealed that it plans to invest up to $10 billion in India over the next three years in sectors such as financial services and healthcare, as it adopts a cautious approach to China amid trade and geopolitical tensions.

Mohit Bhandari, Temasek’s managing director for India investments, told Reuters on Monday that the investment firm aims to increase its exposure to the world’s fifth largest economy from 7 percent currently. Temasek deployed $3 billion into the South Asian nation in the fiscal year ending March, its largest annual investment so far.

Investment returns from the US and India helped offset underperformance in China in the latest fiscal year, according to a release from Temasek last week. Outside of Singapore, the US continued to be the top destination for Temasek’s capital, followed by India and Europe.