Barings LLC is preparing to launch an Australian private credit fund, seeking to provide an alternative funding source beyond banks and the bond market, an executive at the investment company said.
The fund hopes to raise A$1.4 billion ($893 million) from institutional and high net-worth investors in the next 12 to 18 months that will be lent to Australian corporate borrowers, Shane Forster, head of the firm’s Asia Pacific private finance group in Hong Kong, said in an interview.
Private credit has grown into a $1.6 trillion market worldwide as banks shy away from more risky lending. The market is still emerging in Asia Pacific. But some notable companies — including Whitehaven Coal Ltd., Australian casino operator Star Entertainment Group Ltd. and budget airline AirAsia — have recently tapped debt funds.
Forster said Barings’ new fund is offering investors net returns of five to six percentage points over the cash rate, which the Reserve Bank of Australia last week lifted to a 12-year high of 4.35%.
Barings currently has about A$2.6 billion of loan assets in the country, primarily in healthcare, education and software. “We can find arguably lower risk businesses here in Australia and New Zealand than the smaller deals we do in Europe and US,” he said.
