Pension investor IFM sets up Singapore office to deploy private debt capital in Asia

[SINGAPORE] Australia-based IFM Investors, which invests global pension capital, aims to deploy as much as US$250 million to US$300 million of debt capital for enterprises in South and South-east Asia in the near term.

To support its private market capabilities across these regions, especially in diversified credit through local origination and execution, it has launched an office in Singapore, said a press statement on Thursday (Sep 3).

In addition to capturing growth opportunities in Asia, IFM also hopes to win more institutional capital.

The team has already begun to invest in private credit deals targeting sectors such as industrials, manufacturing, services and renewable energy.

Part of its firepower is funded by the Australian government’s commitment to invest A$175 million (US$125.4 million) in IFM’s Asia-Pacific Debt Fund.

The investment was made under the Australian government’s Southeast Asia Investment Financing Facility, through which the country aims to raise its economic engagement with the region.

IFM Investors is owned by a collective of 15 Australian superannuation funds and one UK pension fund. It manages A$291.6 billion in assets and serves more than 880 institutional investors globally.

Of its assets under management, A$138.4 billion is invested in infrastructure equity; A$87.8 billion in listed equities; A$21.4 billion in real estate; and roughly A$44 billion in debt including infrastructure debt, diversified credit and private credit.

“Compelling asset class”

Private debt remains relatively nascent in Asia, which suggests lucrative opportunities for funds with capital to deploy.

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IFM is looking to lend to small and medium-sized enterprises (SMEs), for instance, which may not be able to access bank facilities. It may also co-lend alongside banks.

It also aims to fund “special situations”, catering for companies which seek debt or structured equity solutions.

Hiran Wanigasekera, executive director and co-head of Apac diversified credit, said: “Opening an office in Singapore reflects IFM’s strong conviction in Asia as a long-term investment destination, and our commitment to building an enduring investment presence in the region on behalf of working people and retirees globally.”

He added: “We also believe Apac private credit is at an inflection point, with the market growing nearly fourfold from a low base over the past 15 years. It is this strong projected growth which makes it an increasingly compelling asset class that we believe can bring key structural benefits to global portfolios during this increasingly volatile time in markets.”

IFM began investing in private credit in Australia and New Zealand in the late 1990s and expanded into infrastructure financing in the US and Europe around 2012.

Wanigasekera noted: “We’re coming from a place of strength and an established capability. Asia is the right place to expand, because we’re starting to see private credit as an asset class strategically take off and grow with an increased level of interest from both general GPs (general partners) and LPs (limited partners) on a regional basis.

“Our aspiration is for this business in Asia to be just as big as it is in Australia and New Zealand.”

Lee Hong Ern, investment director for Apac diversified credit, said there is a “very large, untapped demand in places that banks cannot operate in”. Banks, he said, tend to favour large businesses. SMEs are a “very bright spark”.

“Demand is there but supply is very low, not just because banks are not there, but also because there are very few private credit funds. We get good yields and have good negotiating power when it comes to structuring a deal. We can get the kind of collateral that we don’t see (elsewhere). Because of that, we have good creditor protection.”

Wanigasekera added: “Europe and the US in particular are mature markets… Now they’re almost tipping over to the point where there’s an excess supply of capital. Too many sources chasing too few deals is driving that looseness in the structure, and that’s what makes Asia very attractive to us.”