Private Credit is growing in Asia!
Goldman Sachs and Mubadala, the sovereign wealth fund of the Emirate of Abu Dhabi, have officially entered into a substantial financial agreement worth $1 billion.
For those who may not be familiar, Private Credit involves the practice of providing loans (rather than acquiring ownership stakes) to businesses or individuals typically excluded from traditional banking services. This lending practice targets higher-risk borrowers, leading to elevated interest rates on the loans. Additionally, in the event of insolvency, these lenders are prioritized for repayment ahead of other creditors.
Interestingly, Private Credit is one of the fastest-growing asset classes. It has almost $1.4 trillion in AUM with over $350 billion awaiting deployment! Moreover, Moody's Corporation estimates the market to reach at least $2 trillion by 2027!
According to a report by HSBC, Asia’s Private Credit landscape is still nascent but its AUM has seen an average growth rate of 29%!!!
Thus, in a bid to monetize on the growing Asian Private Credit opportunities, investment banking giant Goldman Sachs and Abu Dhabi’s sovereign wealth fund Mubadala Investment Company have signed a partnership deal worth $1 billion!
According to the statement, both companies have agreed to co-invest in Private Credit opportunities in the APAC region with a particular focus on India!
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