DBS Group Holdings has agreed to be an anchor investor in a private debt fund focused on Asia-Pacific to capture new revenue and growth opportunities arising from special situations created by the Covid-19 pandemic.
The Singapore-based banking group is expected to invest up to US$200 million in Muzinich Asia Pacific (APAC) Private Debt I or 40% of the total fund size, whichever is lower. DBS will gain a representation on the fund’s investment committee and advisory committee.
The fund is focused on private debt solutions targeted at lower middle-market companies, or those with an Ebitda range of US$5 million to US$50 million and an operating history of three years or more with audited financials. It is managed by Muzinich and Co., a privately-owned international investment firm with US$39.3 billion in assets under management.
DBS chief executive officer Piyush Gupta says: “The special situations space is already well-established in the US and Europe. But in the Asia-Pacific, there is still room for further penetration, especially now, when more compelling opportunities arise in Asia as it gradually recovers from the pandemic. This fund can play an integral role in bridging the financing gap faced by businesses that have been dislocated by the disruptions, complemented by our already established fixed income franchise in deal sourcing and meeting more bespoke funding and investment needs across Asia.”
Special situations cover companies that may face temporary operational or financial stress, but have a healthy core that is perceived to be of investment value.
DBS says the investment will provide growth exposure to recovery opportunities in Asia-Pacific, which is one of the world’s fastest-growing regions. The region’s GDP is growing at 4.8% per annum, compared with 1.5% in Europe and 2.1% in North America.
Also, the fund’s investment approach, which incorporates environmental, social and governance (ESG) factors, aligns with its focus to support corporates in adopting sustainable financing, DBS adds.