US-based debt investor Muzinich & Co has closed its first private credit fund for Asia Pacific at $500 million, according to an announcement on Monday.
The Singapore-based fund was backed by DBS Bank, which contributed $200 million as its anchor limited partner (LP). Around 80% of its LPs were institutional investors, with at least half of its LP base coming from the Asia Pacific region.
Muzinich Asia Pacific Private Debt Fund I aims to provide flexible financing to “core and lower middle-market companies” in the APAC region, which it defines as businesses generating $3-30 million EBITDA earnings annually.
It primarily focuses on senior secured loans, with room to invest in subordinated and second lien mezzanine structures; loan sizes range from $20-75 million over a tenure of about three years. The fund uses a floating rate in the high single digits to mid-teens, Andrew Tan, Muzinich’s Asia Pacific CEO and Head of Asia Pacific Private Debt, told DealStreetAsia in an interview.
Since the launch of its APAC debt fund in 2021, Muzinich has already completed eight deals comprising 35-40% of the fund across markets like Australia, India and Hong Kong. The fund aims to achieve a “low-to-mid-teens” return for its investors and has a more conservative risk-return profile while offering its LPs an early opportunity to invest in Asia’s growth story through credit.
Muzinich’s Asia team is based in Singapore, Hong Kong, and Australia. It has 15 offices globally, including in the US and Europe. Muzinich offers a range of corporate credit funds across developed and emerging markets and manages $35.8 billion in fixed income credit assets as of May 31, 2023.
Edited excerpts of the interview with Andrew Tan:
