SINGAPORE (THE BUSINESS TIMES) - DBS announced on Thursday (June 17) that it will be the anchor investor in a special situations opportunities private debt fund by Muzinich Asia Pacific.
South-east Asia's largest bank will pump in US$200 million (S$267.5 million) or 40 per cent of the total fund size, whichever is lower. It will also have representation on the fund's investment committee and advisory committee.
The investment into the private debt fund is in line with the group's strategy of investing in new revenue and growth opportunities arising from companies that may face temporary stress from the Covid-19 pandemic, but have a healthy core perceived to be worth investing in.
The Muzinich Apac Private Debt Fund is focused on private debt solutions targeted at lower middle-market companies and is managed by Muzinich and Co, a privately owned international investment firm founded in New York in 1988. It has total assets under management amounting to US$39.3 billion.
The fund aims to generate high recurring cash income with capital appreciation potential while minimising credit impairments, build a diversified portfolio across geographies and industries and incorporate an environmental, social and governance (ESG) conscious approach towards investments.
In a statement, DBS said that the investment will offer the bank growth exposure to recovery opportunities in the Asia-Pacific, which is one of the world's fastest-growing regions, as well as extend and diversify credit risk participation beyond DBS' traditional debt portfolio.
It will also enable more active involvement in the fund activities to build up product know-how in the special situations space, DBS added. Its ESG-focused investment approach also aligns with the bank's emphasis on sustainable financing.
Mr Piyush Gupta, chief executive of DBS, said: "The special situations space is already well established in the US and Europe. But in the Asia-Pacific, there is still room for further penetration, especially now, when more compelling opportunities arise in Asia as it gradually recovers from the pandemic."
He added that the fund can play an integral role in bridging the financing gap faced by businesses that have been dislocated by the disruptions, complemented by its fixed income franchise in deal sourcing and meeting more bespoke funding and investment needs across Asia.