Temasek’s private credit arm raises $1.69 billion for new fund

Singapore - A unit of Singapore’s investment company Temasek has raised US$1.3 billion (S$1.69 billion) for its second private credit fund, in a sign that Asia’s fledgling direct lending industry remains attractive to investors hungry for yield and asset diversification.

SeaTown Holdings International completed the fund raising for its SeaTown Private Credit Fund II, backed by a group of limited partners including insurers, endowments and family offices, the alternative investment firm said in a statement. The new fund also received support from an unspecified Middle Eastern institutional investor.

With the US$1.2 billion secured for SeaTown Private Credit Fund I, the firm’s private credit strategy now oversees more than US$2.5 billion in assets under management, the statement said.

The Singapore firm’s funding success offers hope that the world’s US$1.7 trillion private credit industry is slowly getting back on its feet after a slump earlier in 2024 when the US Federal Reserve maintained its tight policy stance amid sticky inflation. Now with the US central bank widely expected to reduce interest rates in September, direct lenders’ prospects have turned brighter, especially for those in Asia where growth has been faster given a low base.

Private debt fund raising in the Asia-Pacific reached US$1 billion in the second quarter, up from US$600 million between January and March, according to data provider Preqin. The improvement came after direct lending globally scraped the lowest level in any quarter since 2020 in the first three months of 2024.

SeaTown’s new fund closing adds to a series of such moves by Asia-focused private debt investors earlier in the year, including Hong Kong-based alternative credit manager Tor Investment Management and Singapore-based Kadita Partners.

SeaTown’s latest fund is already over 70 per cent deployed, having swiftly utilised the commitments secured from investors in earlier closes, Mr Eddie Ong, the firm’s deputy chief investment officer and managing director of private investments, said in e-mailed comments.

The alternative investment firm is looking at deals typically between US$50 million and US$150 million, and potentially larger if it brings in co-investors from its limited partners, Mr Ong said.

The fund targets mid-teens net returns and double-digit distribution yield for investors over its life­span, according to the statement from SeaTown, a wholly owned unit of Temasek’s asset management group Seviora Holdings.

SeaTown’s current portfolio spans across key economies in the Asia-Pacific, including Japan, Vietnam, Greater China, Australia, and India, Mr Ong said. REUTERS