As the $1.7tn private credit industry faces its most significant fundraising slump since 2020, private lenders including Adams Street Partners, Antares Holdings and Hayfin Capital Management are increasingly turning their attention to Latin America, according to a report by Bloomberg.
Private credit firms are reportedly targeting the growing pools of capital from pension funds as well as wealthy individuals.
The report quotes Philippe Stiernon, CEO and managing partner at ROAM Capital, a Latin American alternative asset placement agent: “Capital is becoming scarce in the US and Europe, with funds struggling to secure investment renewals. This challenging environment is pushing managers, even top-quartile ones, to diversify beyond their home markets.”
As institutional investors in the US and Europe reach ‘saturation points’, with some major pension funds and insurance companies allocating over 30% of their assets to private credit, funds are exploring new regions, including the Middle East and Asia, and creating funds for retail buyers. In Latin America, private lenders see an opportunity to tap into growing wealth and offer a safer investment alternative to the region’s volatile domestic debt markets.
Jeff Schlapinski, managing director of research at GPCA, a global industry association for private capital in emerging markets, said: “Pension assets in Latin America have grown a lot over the last decade or two. They’re showing more appetite for alternatives, and investing in US managers has been a growing source of capital.”
Since a 2017 law lifted restrictions in Mexico, retirement managers have been allowed to allocate funds to foreign firms, opening new avenues for investment.
Muzinich & Co recently relocated its Madrid-based director of sales and marketing, Jesús Belascoain, to Miami to focus on Latin American investors. Similarly, Ares Management partnered with Brazilian firm Vinci Partners Investments to distribute its products last year.
According to Stiernon, Latin America is “the last major frontier for LP growth” in the alternative investments landscape.
