Key findings across Asia and globally include:
Insurance allocations: Insurance capital continues to flow into private credit, as insurers increasingly identify that private credit assets are a very attractive match for their liabilities. There are regional divergences in terms of how these investors allocate their capital, with Asian insurers generally taking a less bespoke approach than in the US and Europe.
Rated note feeders are increasingly used as a structuring tool for insurance capital, with 63% of managers having considered them for US insurers. By contrast, only 35% of managers considered this structure for Asian insurers, as in many cases Asian investors have more flexibility in terms of navigating the regulatory capital restrictions applicable to them.
Trusted domicile choices: Luxembourg, Cayman, the US and Ireland remain the top domiciles, with many managers running parallel vehicles to address investor preferences. In particular, the Cayman Islands remains a key domicile, particularly for funds with global or Asian investor pools and for US managers raising offshore money.
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Investor demand for liquidity is rising: 64% of respondents report rising investor demand for liquidity (up from 49% in 2023), with two-thirds of managers surveyed now having at least one vehicle offering investors some form of periodic redemption (up from around half in 2023).
Investor appetite for co-investment has surged.
"Private credit is no longer seen as a niche asset class in Asia and is becoming an important source of diversification and income for a broader base of investors," says Dean Collins, Managing Partner, Dechert Singapore.
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"We are seeing strong momentum as regulators and market participants work to expand access to private market strategies, including retail access. This is reshaping the way managers structure products and engage with investors.
"As private credit continues to mature in the region, managers who can balance the demand for enhanced liquidity, including evergreen vehicles, with customised products, flexible fee models and co-investment opportunities will be best placed to meet the nuanced demands of institutions, insurers and high-net-worth clients,” adds Collins.
