Global private credit giants are increasingly turning to Asia-Pacific as a key growth frontier, driven by widening funding gaps, evolving capital markets, and the retreat of traditional bank lending, according to a report by CNBC citing data from PitchBook.
The region’s under-penetrated credit landscape, combined with robust economic growth and rising demand for alternative financing, is attracting major players seeking diversification beyond saturated US and European markets.
PitchBook’s data shows that private credit assets under management (AUM) in Asia rose to $62.3bn in Q1 2024, up from $34.3bn in 2017 and virtually zero in 2000. While banks still dominate the region’s lending — providing about 79% of credit, versus 54% in Europe and 33% in the US — private credit is rapidly stepping in to fill the mid-market financing gap.
In recent moves, Apollo Global Management was selected to manage Singapore’s $1bn private credit fund, while Hillhouse Investment is looking to deploy $1bn-$2bn annually in Japan. Industry observers say that India, Southeast Asia, and Australia are also becoming focal points for capital, alongside China and South Korea in more targeted strategies.
Even in countries like Japan and South Korea, where banks remain dominant, analysts say there is rising opportunity in the mid-market space, particularly for bespoke private credit solutions. China, despite macro headwinds, still offers targeted prospects, especially where banks are deleveraging.
However, challenges remain. Currency volatility, inconsistent legal enforcement, regulatory complexity, and transparency issues can all affect deal structures and risk-adjusted returns.
Despite these risks, KKR’s Diane Raposio, Head of Asia Credit & Markets, estimates the market could expand by $700bn, supported by a sharp mismatch between economic output and credit penetration – while Asia accounts for nearly 60% of global GDP growth, less than 5% of local financial assets are currently allocated to credit.
