DBS invests in APAC private debt fund

The bank will anchor up to US$200m or 40% of the fund size, whichever is lower.

DBS Group Holdings has inked an agreement to be an anchor investor in the Muzinich Asia Pacific (APAC) Private Debt I, a fund focused on private debt solutions targeted at lower middle-market companies.

The bank is expected to anchor up to US$200m or 40% of the total fund size, whichever is lower.

“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,” DBS CEO Piyush Gupta said regarding the investment.

“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,” he added.

As an anchor, DBS will have representation on the fund’s investment committee and advisory committee, the bank said in a press release.

The fund is managed by Muzinich and Co., a privately-owned international investment firm with total assets under management (AUM) amounting to US$39.3b.

Amongst the funds objectives are to: generate high recurring cash income with capital appreciation potential while minimising credit impairments; build a diversified portfolio across geographies and industries; and incorporate an environmental, social and governance (ESG) conscious approach towards investments.

According to DBS, investing with the fund will provide them with: growth exposure to recovery opportunities in APAC; extend and diversify credit risk participation beyond DBS’ traditional debt portfolio; and have a more active involvement in the fund activities to build up product know-how in the special situations space.

The fund’s ESG-focused investment approach also aligns with DBS’ focus to support corporates in adopting sustainable financing, the bank said.