Latest news with #Apac
Business Times
9 hours ago
- Business
- Business Times
US investors, Asia's ultra-rich drive growth in Asia-Pacific private credit
[SINGAPORE] A slight uptick in private-credit fundraising in Asia-Pacific (Apac) last year has given market players optimism for a positive 2025, even as investors continue to avoid China. They said deals in India and Australia can fill the gap, while more investors within and outside Apac are allocating capital to private credit in the region. And the key sectors they are looking to lend to are infrastructure such as data centres, and renewable energy. Last year, Apac-focused private credit fundraising hit almost US$5.9 billion across 33 funds, 7.5 per cent higher than the $5.5 billion raised from 32 funds in 2023, according to Preqin Pro data. 'Given the success of private credit strategies in the US and Europe generally, many of the funds from these markets view Asia as the next frontier, both from a capital deployment perspective and a market diversification perspective,' Shaun Langhorne, partner at law firm Clifford Chance, told The Business Times. State Street is seeing more US credit managers looking to diversify into Apac. West Coast-based managers are looking for new growth ideas, according to Eric Chng, senior managing director for global alternatives at State Street. 'They have come to a point where they can only grow US for so much, they're looking for new ideas for growth. Recently, I had two conversations with two managers, each managing more than US$100 billion in private credit. They are asking me, how do I deploy to Asia?' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The US remains the biggest market for private credit, which market players estimate is around US$1.7 trillion in global assets under management (AUM) currently. Apac, which Preqin said accounts for 5 per cent of the global market, could grow at an annualised rate of 8 per cent until 2029 to US$160 billion. In a State Street survey of 450 institutional investors over the world – 120 of them from Asia – 31 per cent said they would deploy more capital this year to developed Apac, a subset spanning Singapore, Australia, Japan, Hong Kong and New Zealand. That's up from 29 per cent in 2024. American investors in Apac deals A look at some of the biggest private credit deals in the Asia-Pacific shows the deep involvement of American investors. These include India's biggest deal on record: a US$3.4 billion refinancing for conglomerate Shapoorji Pallonji Group. Investors include American managers such as Ares Management, Cerberus Capital Management, Davidson Kempner Capital Management and Farallon Capital Management. Goldman Sachs Asset Management's hybrid fund – part of its private credit strategy – has also reportedly provided US$600 million to partially finance conglomerate Jubilant Bhartia Group's purchase of a 40 per cent stake in Coca-Cola's Indian bottling unit. Another reason investors are showing more interest in Apac is the higher spreads they can get here, compared to the competitive and mature markets in the West, said Chng. 'Because it's so ultra competitive, the spreads are lower than what you get in Asia, and the outperformance of Asian credit is at the top of mind of a lot of Western fund managers … as a fund manager, if you know that you can get 200 basis-point extra spread on the same structure in Asia, you will find a way to get there.' Spread measures the additional yield that investors demand for holding debt with a higher perceived credit risk than a safer bond, such as a government bond or an investment-grade corporate bond Investor interest globally has been rising in private credit, the financing provided by non-bank lenders to companies. That's as returns have beaten those from private equity (PE) in the past three years, and where PE investors are facing challenges in exiting their current investments due to the volatile deal climate. An Apr 29 report by index provider MSCI shows that private credit funds generated 6.9 per cent last year, exceeding the PE funds' return of 5.6 per cent. 2024 marked the third straight year of outperformance. For Apac, the returns could be in the range of mid-to-high-teens per cent, said Chng. More family offices getting invested Within Asia itself, more family offices are allocating funds to private credit, as their liquidity needs and investment horizon are aligning closer to those of institutional investors. 'Family offices are now coming into private credit space in a big way, because they have similar needs to the institutional investors,' said Serene Chen, Asia-Pacific head of credit, currency and emerging market sales, and head of Singapore institutional sales at JPMorgan Chase. While family offices comprise less than 10 per cent of the Asian investor base in private credit, interest is growing, Chen said. JPMorgan has also seen increased participation in private credit from Asian institutions, across local sponsors, insurance and pension funds, she added. With the increased interest, market players said private credit managers have no problems securing capital in Apac. These include Ares, which is raising another Asia special situations fund to boost its credit investments in the region. It's reportedly targeting a size no smaller than its previous fund, which hit about US$2.4 billion in 2023. On Jun 12, Chicago-headquartered investment manager Nuveen announced the second close of its Australian commercial property debt fund, raising more than A$650 million. Last month, Singapore-headquartered Granite Asia said it secured over US$250 million from anchor investors for its first private credit fund. Active fund-raising Market players noted that raising capital isn't an issue, especially as lower returns and the challenging exit environment for PE investments are leading investors to turn to private credit. Some note that, with investors still preferring to steer clear of China – traditionally the biggest private credit market in Asia – the danger is borrowers may have the upper hand. With a 'deep pool of capital chasing' limited pool of borrowers, some private credit fund managers could be tempted to impose less stringent terms to ensure deployment, said State Street's Chng. Clifford Chance's Langhorne said it's not a clear-cut case that a deep capital pool would improve the bargaining position of borrowers. Citing the Sharpooji Pallonji deal signed last month, he said: 'Demand was high and they were able to borrow a substantial amount in one transaction. However, given they are unlikely to be able to raise the same amounts of capital from traditional capital providers, the trade-off for the borrower involves meeting the returns the private credit funds seek, as well as accommodating the structure and protections required to deploy the funds.' The loan tenor for that transaction is three years, with the yield on the zero-coupon bond hitting as high as 19.75 per cent. 'There is a lot of capital available for deployment, but that does not mean that capital providers are just throwing money at the borrowers seeking capital. The investment still has to meet their expected returns and risk expectations,' said Langhorne.
Business Times
7 days ago
- Business
- Business Times
Still more room for growth for decarbonisation in Apac economies: MSCI
[SINGAPORE] Despite the reliance on fossil fuels, 837 Asia-Pacific corporations have disclosed their climate-transition plans, doubling the commitment growth from 25 per cent in 2023 to 50 per cent in 2025, a report by investment research firm MSCI showed. This demonstrates a 'growing momentum towards adopting transition plans and advancing technological innovation to support corporate decarbonisation efforts', MSCI added. It noted that the doubling of the number of companies that have committed to the Science Based Targets initiative standard indicated a strategic focus on real economy decarbonisation. There are 3,874 constituents in the MSCI AC Asia Pacific Investable Market Index (IMI). Twenty-two per cent (or 837) of the companies disclosed transition plans in 2024, with the information technology sector being the highest with 27 per cent having transition plans, followed by industrials at 26 per cent, and materials sectors at 23 per cent. Internationally, Japan had the highest disclosures at 45 per cent, followed by South Korea at 33 per cent, and Taiwan at 30 per cent, with an increase of disclosed transition plans from 12 per cent in 2022 to 22 per cent in 2024 in Apac. MSCI added that companies with transition plans were more likely to disclose key climate metrics than those without. They were also more likely to report their Scope 1, 2 and 3 emissions as well as set climate targets. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up Apac economies also heavily rely on fossil fuels, contributing more than 40 per cent of global greenhouse gas emissions in 2023. As the global average temperature surpassed the threshold set by the Paris Agreement, reaching a record high of 1.5 degrees Celsius above pre-industrial levels in 2024, MSCI examined corporate transition plans across 13 Apac markets, with a focus on clean-tech investment. The research firm noted that corporate disclosure of transition plans may drive clean-tech demand by signalling the need for emissions reduction technologies. The speed and scale at which Apac corporations can decarbonise will depend not only on their ambition, but also on their technology road map, capital allocation, and access to commercially viable clean technologies. To better understand how transition plans can drive clean-tech demand in Apac, MSCI analysed the transition plans in areas such as energy, utilities and materials sectors. The effects of these policies are reflected in the energy sector. Of the 90 companies in the energy sector in the MSCI AC Asia Pacific IMI, 18 per cent (or 16 companies) of them disclosed their transition plans, planning to invest in hydrogen, renewable energy and electric vehicles (EVs) to diversify their revenue streams towards clean energy. They have also integrated hydrogen fuels into their transition plans, reducing greenhouse gas emissions across all modes of operations. In addition to the 16 energy companies, 200 companies or 5 per cent of the MSCI AC Asia Pacific IMI constituents hold hydrogen-related patents, with technologies that demonstrate hydrogen's potential to fully replace other less-sustainable choices such as fossil fuels. The emerging technologies may demonstrate hydrogen's potential as a low-carbon energy carrier. But MSCI noted that 'scaling up hydrogen production and balancing supply and demand may face significant challenges due to high production costs and infrastructure requirements'. Electric and hybrid vehicles in transition plans However, the market penetration of the policies in electric and hybrid vehicle companies is not as successful. Of the constituents of the index, only 4 per cent (or 150) of the companies provide clean transportation solutions. Despite the low disclosure rate, 4% of companies, such as Zhejiang Leapmotor and LG Energy Solution, posted a compound annual growth rate of over 150% in total sales from 2020 to 2023. CREDIT: MCSI ESG RESEARCH However, MSCI said that makers of these vehicles can capitalise on market growth and the rising demand for clean transportation solutions. EV solutions providers and EV component makers such as Zhejiang Leapmotor and LG Energy Solution posted a compound annual growth rate of over 150 per cent in total sales from 2020 to 2023. Success in utilities sector More than 80 per cent of the 23 Apac utilities constituents indicate transition plans involving the use of clean fuels in their road maps, such as hydrogen-fired generation, reflecting the success and growing priorities for sustainability in the sector. The diversification of low-carbon power generation can be attributed to research reflecting that renewable powers surpassed 50 per cent of the electricity market share. Waaree Renewable and KPI Green, which derive most of their revenues from renewable energy solutions, reported a compound annual growth rate of more than 100% between 2020 and 2023. CREDIT: MCSI ESG RESEARCH This is reflected in two Indian companies – Waaree Renewable and KPI Green, which derived most of their revenues from renewable energy solutions and reported a compound annual growth rate of more than 100 per cent between 2020 and 2023. Despite the success and expansion, certain countries and market dynamics are not as promising due to slower phase-outs of coal-fired power plants, such as China, Indonesia and India; other countries such as Japan still provide petrol subsidies, which slow decarbonisation efforts. Growth in materials sector According to the report by MSCI, more than 90 per cent of companies in the materials sector disclosed their transition plans, developing low-carbon steels. A common challenge faced in this sector is the intense heat required for operations, making fossil fuels the most practical option. Despite the heavy use of fossil fuels, less than half of the companies considered adopting carbon capture and sequestration, which involves capturing the carbon produced to store them underground. The success of companies disclosing their transition plans are reflected in steel industries such as Tianqi Lithium, Chifeng Jilong Gold Mining and LB Group, growing the low-carbon patent quality for their materials by 70 per cent from 2020 to 2023. Room for growth in carbon credits However, only 2 per cent of the carbon projects are rated 'A' or 'AA', with 65 per cent of projects falling into 'B' to 'CCC' ratings. This indicates a shortage of high-quality options for credible transitions. It also raises concerns about their environmental impact and the reputational risks for companies.
Business Times
12-06-2025
- Business
- Business Times
Oversupply from China to cut Singapore construction material prices further in Q2
[SINGAPORE] Prices for some construction commodities in Singapore are tipped to fall further in the second quarter, with steel rebar prices forecast to fall 13 per cent year on year driven by oversupply and competitive exports from China. This could benefit developers, builders and other construction contractors, though new tariffs may disrupt global supply chains in the near term, a report by construction consultancy Linesight said. Linesight predicted that prices for several key materials – such as copper, steel rebar, stainless steel, steel flat, cement and diesel – will dip in the second quarter of this year. Lower prices of between 1 and 13 per cent year on year follow corrections across most of the Asia-Pacific (Apac) in 2024. Steel rebar prices in Singapore, for instance, have been on a decline since Q2 2023. It is forecast to fall another 20.6 per cent in Q2, extending an estimated 19.7 per cent decline in the first quarter. Year on year, steel rebar prices are expected to be 13 per cent lower. The drop in steel rebar prices, in particular, is set to continue in most of Apac and Gulf Cooperation Council markets amid global trade tensions and uncertain local production, said Linesight. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Oversupply and competitive export prices, especially from China, puts pressure on regional steel rebar prices, it added. 'The imposition of US tariffs has inadvertently increased domestic steel availability, further contributing to price declines in some regions.' Prices of concrete, lumbar and plasterboard are estimated to hold steady in Q2, while that of bricks could inch up 1 per cent and aluminium up 6 per cent. Aluminium prices had fallen in the previous year – bucking gains in most of Apac – due to already high base prices, Linesight noted. But tight supply conditions, rising production costs and geopolitical factors turned the tide in 2025 with prices up seen creeping back up, it said. For the rest of this year, Linesight projects a -1 to +1 per cent price change for most of Singapore's construction commodities. 'Global geopolitical tensions continue to contribute to the overall inflationary risk premium in the construction industry,' said Linesight. 'Trade restrictions, tariff uncertainties, and raw material bottlenecks are creating unpredictable cost scenarios for developers and contractors. These factors, coupled with energy market volatility, are amplifying volatility in cost planning and procurement.' Easing wages The consultancy pointed out that labour inflation eased in Singapore as well, to 1.5 per cent in 2024, from 9 per cent in 2023. Still, shortages in structural skilled labour persist, putting pressure on the cost of construction, it said. Linesight added that mission-critical sectors are now facing inflationary pressures, with tight contractor availability and longer lead times for equipment. These include sectors such as data centres, renewable energy facilities and artificial intelligence-driven infrastructure projects. Overall, construction output is likely to grow steadily across Apac, with strong activity in data centres, infrastructure, industrial and energy sectors, Linesight's report showed. This is mainly driven by government spending, coupled with large scale projections and industrial expansion, it said. The region is poised to see the fastest growth of data centre colocation over the next five years, commanding a massive construction pipeline of US$56.4 billion. Singapore's construction industry is forecast to see average annual growth of 4.1 per cent from 2025 to 2028, up from 3.3 per cent in 2024, fuelled by investments in oil and gas, transport, and renewable energy projects. Construction contracts surged 34 per cent year on year in the first nine months of that year. The industry's projected improvement is further boosted by the government's push to achieve 2 gigawatt-peak of solar power by 2030 and carbon neutrality by 2050, said the consultancy. Billions of dollars have also been set aside for its Land Transport Master Plan 2040, which charts Singapore's land transport strategies, and the undersea energy cable project, it said.
Business Times
12-06-2025
- Business
- Business Times
Singapore construction material costs to fall further in Q2 but tariffs may disrupt supply
[SINGAPORE] Prices for some construction commodities in Singapore are tipped to fall further in the second quarter, with steel rebar prices forecast to fall 13 per cent year on year driven by oversupply and competitive exports from China. This could benefit developers, builders and other construction contractors, though new tariffs may disrupt global supply chains in the near term, a report by construction consultancy Linesight said. Linesight predicted that prices for several key materials – such as copper, steel rebar, stainless steel, steel flat, cement and diesel – will dip in the second quarter of this year. Lower prices of between 1 and 13 per cent year on year follow corrections across most of the Asia-Pacific (Apac) in 2024. Steel rebar prices in Singapore, for instance, have been on a decline since Q2 2023. It is forecast to fall another 20.6 per cent in Q2, extending an estimated 19.7 per cent decline in the first quarter. Year on year, steel rebar prices are expected to be 13 per cent lower. The drop in steel rebar prices, in particular, is set to continue in most of Apac and Gulf Cooperation Council markets amid global trade tensions and uncertain local production, said Linesight. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Oversupply and competitive export prices, especially from China, puts pressure on regional steel rebar prices, it added. 'The imposition of US tariffs has inadvertently increased domestic steel availability, further contributing to price declines in some regions.' Prices of concrete, lumbar and plasterboard are estimated to hold steady in Q2, while that of bricks could inch up 1 per cent and aluminium up 6 per cent. Aluminium prices had fallen in the previous year – bucking gains in most of Apac – due to already high base prices, Linesight noted. But tight supply conditions, rising production costs and geopolitical factors turned the tide in 2025 with prices up seen creeping back up, it said. For the rest of this year, Linesight projects a -1 to +1 per cent price change for most of Singapore's construction commodities. 'Global geopolitical tensions continue to contribute to the overall inflationary risk premium in the construction industry,' said Linesight. 'Trade restrictions, tariff uncertainties, and raw material bottlenecks are creating unpredictable cost scenarios for developers and contractors. These factors, coupled with energy market volatility, are amplifying volatility in cost planning and procurement.' Easing wages The consultancy pointed out that labour inflation eased in Singapore as well, to 1.5 per cent in 2024, from 9 per cent in 2023. Still, shortages in structural skilled labour persist, putting pressure on the cost of construction, it said. Linesight added that mission-critical sectors are now facing inflationary pressures, with tight contractor availability and longer lead times for equipment. These include sectors such as data centres, renewable energy facilities and artificial intelligence-driven infrastructure projects. Overall, construction output is likely to grow steadily across Apac, with strong activity in data centres, infrastructure, industrial and energy sectors, Linesight's report showed. This is mainly driven by government spending, coupled with large scale projections and industrial expansion, it said. The region is poised to see the fastest growth of data centre colocation over the next five years, commanding a massive construction pipeline of US$56.4 billion. Singapore's construction industry is forecast to see average annual growth of 4.1 per cent from 2025 to 2028, up from 3.3 per cent in 2024, fuelled by investments in oil and gas, transport, and renewable energy projects. Construction contracts surged 34 per cent year on year in the first nine months of that year. The industry's projected improvement is further boosted by the government's push to achieve 2 gigawatt-peak of solar power by 2030 and carbon neutrality by 2050, said the consultancy. Billions of dollars have also been set aside for its Land Transport Master Plan 2040, which charts Singapore's land transport strategies, and the undersea energy cable project, it said.
Business Times
12-06-2025
- Business
- Business Times
Construction material costs to fall further in Q2, but tariff policy may disrupt supply chains
[SINGAPORE] Prices for some construction commodities in Singapore are tipped to fall further in the second quarter, with steel rebar prices forecast to fall 13 per cent year on year driven by oversupply and competitive exports from China. This could benefit developers, builders and other construction contractors, though new tariffs may disrupt global supply chains in the near term, a report by construction consultancy Linesight said. Linesight predicted that prices for several key materials – such as copper, steel rebar, stainless steel, steel flat, cement and diesel – will dip in the second quarter of this year. Lower prices of between 1 per cent and 13 per cent year on year follow corrections across most of the Asia-Pacific (Apac) in 2024. Steel rebar prices in Singapore, for instance, have been on a decline since Q2 2023. It is forecast to fall another 20.6 per cent in Q2, extending an estimated 19.7 per cent decline in the first quarter. Year on year, steel rebar prices are expected to be 13 per cent lower. The drop in steel rebar prices, in particular, is set to continue in most of Apac and Gulf Cooperation Council markets amid global trade tensions and uncertain local production, said Linesight. A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up Oversupply and competitive export prices, especially from China, puts pressure on regional steel rebar prices, it added. 'The imposition of US tariffs has inadvertently increased domestic steel availability, further contributing to price declines in some regions.' Prices of concrete, lumbar and plasterboard are estimated to hold steady in Q2, while that of bricks could inch up 1 per cent and aluminium up 6 per cent. Aluminium prices had fallen in the previous year – bucking gains in most of Apac – due to already high base prices, Linesight noted. But tight supply conditions, rising production costs and geopolitical factors turned the tide in 2025 with prices up seen creeping back up, it said. For the rest of this year, Linesight projects a -1 to +1 per cent price change for most of Singapore's construction commodities. 'Global geopolitical tensions continue to contribute to the overall inflationary risk premium in the construction industry,' said Linesight. 'Trade restrictions, tariff uncertainties, and raw material bottlenecks are creating unpredictable cost scenarios for developers and contractors. These factors, coupled with energy market volatility, are amplifying volatility in cost planning and procurement.' Easing wages The consultancy pointed out that labour inflation eased in Singapore as well, to 1.5 per cent in 2024, from 9 per cent in 2023. Still, shortages in structural skilled labour persist, putting pressure on the cost of construction, it said. Linesight added that mission-critical sectors are now facing inflationary pressures, with tight contractor availability and longer lead times for equipment. These include sectors such as data centres, renewable energy facilities and artificial intelligence-driven infrastructure projects. Overall, construction output is likely to grow steadily across Apac, with strong activity in data centres, infrastructure, industrial and energy sectors, Linesight's report showed. This is mainly driven by government spending, coupled with large scale projections and industrial expansion, it said. The region is poised to see the fastest growth of data centre colocation over the next five years, commanding a massive construction pipeline of US$56.4 billion. Singapore's construction industry is forecast to see average annual growth of 4.1 per cent from 2025 to 2028, up from 3.3 per cent in 2024, fuelled by investments in oil and gas, transport, and renewable energy projects. Construction contracts surged 34 per cent year-on-year in the first nine months of that year. The industry's projected improvement is further boosted by the government's push to achieve 2 gigawatt-peak of solar power by 2030 and carbon neutrality by 2050, said the consultancy. Billions of dollars have also been set aside for its Land Transport Master Plan 2040, which charts Singapore's land transport strategies, and the undersea energy cable project, it said.
