Institutional Investors Increase Allocations to Asian Private Credit

Institutional investors are increasing their exposure to private credit in Asia, with recent large-scale capital raises highlighting the growing appetite for direct lending opportunities in the region. Granite Asia and Partners Group recently announced significant new funding, underscoring the trend of managers expanding their footprint in the Asia-Pacific market.

Recent Capital Inflows

Granite Asia announced this week it had raised more than its $500 million target for its Libra Hybrid strategy, a pan-Asian fund launched in 2025. The firm attracted new commitments from DBS Private Bank, an insurer, and other institutional investors, joining anchor backers such as Singapore's Temasek, Malaysia’s Khazanah Nasional, and the Indonesia Investment Authority.

Separately, Partners Group secured a $1 billion private-credit mandate from a major Asian institutional investor earlier this month. The firm noted it has closed more than five such mandates in the past year, with sovereign wealth funds and insurers in Southeast Asia and Japan showing particular interest in increasing their private credit allocations.

An Underdeveloped Market

Despite its economic scale, Asia's private credit market is significantly smaller than its Western counterparts. The region accounts for about one-third of global economic output but represents only 4% of the global private-credit market, according to data provider Preqin.

This gap was evident in recent fundraising figures:

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• Asia-Pacific: APAC-focused funds raised $2.7 billion in the first quarter of 2026.
• North America: Funds focused on this region raised over $10 billion.
• Europe: European-focused funds raised $9.9 billion in the same period.

Preqin forecasts that assets under management for APAC-focused private-credit funds will grow to approximately $142 billion by 2030, compared to a projected $3.35 trillion in North America.

Distinct Regional Characteristics

Market participants note that the Asian market is evolving differently from the sponsor-backed direct-lending model common in the United States and Europe. According to financial advisory firm Kroll, Asian private credit transactions often feature greater exposure to asset-backed financing, secured by real estate, infrastructure, and other fixed assets.

Investor demand remains strong but selective, S&P Global Ratings reported in a July note. The ratings agency found that investors are placing a greater focus on collateral quality, sponsor strength, and covenant protections. S&P also identified Australia as a key market for senior secured direct lending, with regional opportunities emerging in sectors like artificial intelligence, data centers, and the energy transition.