Temasek-owned SeaTown raises about US$900 million as of second close of third private credit fund

[SINGAPORE] SeaTown, owned by Temasek’s asset management group Seviora, has raised about US$900 million as of the second close of its Private Credit Fund III (PCF III), the investment manager said on Wednesday (Dec 10).

This close comes four months after its first close of over US$612 million back in August. Commitments to the fund come from existing and new investors across the Middle East, Japan, Taiwan and Singapore, with the bulk of funding for the latest close coming from private wealth channels in Singapore and Hong Kong.

“The fund is progressing in line with our internal expectations,” Eddie Ong, deputy chief investment officer and head of private investments at SeaTown, told The Business Times. “We remain confident in achieving our fundraising milestones going into the final close.”

The investment firm is targeting a fund size in line with prior vintages such as PCF II, which had a final close at over US$1.3 billion, and the final close of the first private credit fund at US$1.2 billion.

Private credit in the region continues to attract investor attention, even with the low penetration rate in Asia. Ong noted that demand for Asia-focused private credit remains, even though the broader private-credit fundraising environment has moderated this year.

PCF III will be selective and focused on achieving a diversified sector and geographical exposure across the Asia-Pacific. There will also be a strong focus on robust credit structuring, with potential transactions evaluated for impact on portfolio diversification in terms of collateral, risk profile, sector and geographic exposure.

The fund will focus on direct lending across the private-credit spectrum such as senior secured loans, second-lien loans, convertible loans and mezzanine debt.

“Our approach remains consistent across markets: We focus on companies with resilient cashflows, identifiable catalysts for de-risking and strong governance frameworks,” said Ong.

SeaTown expects to differentiate PCF III through sourcing quality and structuring strength amid the forecast Federal Reserve rate cuts. Ong added that even as competition has increased, Asia is still underpenetrated relative to its economic size.

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Asia-Pacific private credit is expected to continue offering an attractive risk-reward profile over the next 12 to 24 months. A strong pipeline of opportunities through different credit and economic cycles will continue to be created by Asia’s markets, said Ong.

Pricing and credit protection continues to be relatively more attractive in Asia compared to more developed markets.

“SeaTown’s advantage lies in our on-the-ground presence and longstanding regional networks, which give us access to opportunities that are not broadly marketed,” said Ong.

“The ecosystem we operate in, combined with deep structuring expertise, give us a differentiated sourcing and diligence advantage, which are important differentiators even as interest rates fall.”