Singapore’s central bank will be allocating $1 billion to top global private credit fund managers as part of the nation’s efforts to develop itself as a full-service private markets hub.
The move is part of an expansion of the private markets programme (PMP), which allocates investment mandates to private equity and infrastructure fund managers who commit to establishing or deepening their presence in Singapore, Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said at the SuperReturn Asia conference on Tuesday.
“There are opportunities for private credit to play a larger role in Asian enterprise financing, just like its private equity counterpart,” he explained.
This is especially so given the numerous macroeconomic headwinds such as rising inflation levels, heightened geopolitical tensions, climate change risks and a severe downturn, said Menon.
“Given that private credit is higher up in the capital structure of a firm than private equity, the former can also offer investors better protection during a downturn,” he added.
PMP was launched in 2018 with an initial funding size of $5 billion. Since then, around $2.2 billion has been allocated to private equity and infrastructure fund managers, who have gone on to set up their regional headquarters in Singapore, grown their value creation teams here and joined hands with institutes of higher learning to create training programmes.
Including the latest injection, the programme’s funding will hit $6 billion.
“Singapore’s connectivity and ecosystem provide the perfect springboard for private equity and venture capital managers to capture opportunities in Asia,” said Menon. “Singapore has political and economic stability, well-regulated financial markets, excellent transport and digital connectivity, a skilled talent pool, and extensive trade linkages with ASEAN.”
Data from the central bank show that assets under management of private equity and venture capital firms in the city-state were up 42% to S$555 billion ($394.4 million). As of June, there were 428 private and capital managers here, compared with 336 at the beginning of 2021.