Barings seeds $690m for new Aus, APAC private credit funds

US-owned global investment firm Barings has launched two APAC private credit funds, including an Australian-focused opportunity, that have collectively attracted more than A$690 million in seed investment.

The Barings Australian Private Credit Fund, tailored for Australian institutional and wholesale investors, is promoted as an open-ended private credit solution offering investors “immediate exposure” to the private credit market.

The income-focused fund invests directly in originated loans to private middle-market companies in Australia and New Zealand.

More than AU$230 million has already been kicked in as a seed investment by an “established global investment multi-manager”, Barings confirmed.

“The fund’s launch with seed assets and strong deployment activity is one of the key differentiators in the current market, where transaction flow has been subdued,” the firm said.

Barings has also announced the first close of its seed round for its Developed Asia Pacific Private Loan Fund 1A.

This closed-end fund was “anchored by a large Asian institutional investor”, it said, collecting in excess of A$460 million in this funding stage.

Commenting on the launch of the Australia fund, Justin Hooley, managing director for Barings’ Asia Pacific Private Finance Group, underscored the current appeal of the Australian private credit market despite a slowing economy.

A “stable economic and legal backdrop” augurs well for investors, he said, with “significant potential for further growth in the years ahead”.

“We continue to identify numerous opportunities in the Australian private credit market as a result of our market position and the opportunities that derive from our current portfolio, despite the fact that there has been a decrease in M&A activity.”

As well, says Shane Forster, APAC head of investment management and managing director for Barings’ Asia Pacific Private Finance Group, the Asia Pacific private credit market likewise offers growing appeal for investors.

“[APAC] exhibits comparable attributes to private credit in North America and Europe, including exposure to high-quality borrowers, but with less competition for lending opportunities, geographical diversification and exposure to expanding developed economies such as Australia, New Zealand, Hong Kong and Singapore.”

Barings’ APAC private credit platform has been an active lender in the region since 2011. The team focuses on the developed economies of Australia, New Zealand, Singapore and Hong Kong, overseeing A$5.8 billion in assets under management.

Globally, Barings counts more than US$431 billion (AU$656 billion) in assets under management.