Asian private credit players rush to bridge funding gap at SMEs and in sectors like education, technology
- Private credit is an important financing tool for mid-market firms that cannot get bank financing or sell bonds or equity in public markets - HSBC’s APAC private credit head
- The technology sector is also catching the fancy of private credit players as public markets become hesitant about the industry amid high demand for capital.
“Outsized demand for capital driven by the region’s strong economic and demographic growth is met with limited supply due to the pullback in bank lending and limited public markets options,” said Celia Yan, head of APAC private credit at BlackRock. “With these changes, companies are increasingly shifting to private credit that can provide flexible, alternative funding solutions.”
High interest rates and the changing economic landscape after the Covid-19 pandemic are some of the factors that are pushing some companies to private lenders for bridge financing.
“Coming out of Covid-19, high rates, consumer behaviour and economic structures have and will change,” said Bo Hu, head of private credit for Asia-Pacific at HSBC. “Private credit is an important alternative source for companies, particularly those in the mid-market segment, that cannot get bank financing or issue a public bond or issue equity easily, for instance.”