Ravi Menon, managing director of MAS, said the Monetary Authority of Singapore is allocating $1 billion with top global trust fund managers as part of broader plans to transform the debtor country into a full-service private markets hub.
โThere are opportunities for private credit to play a bigger role in financing Asian companies just like its private equity counterpart,โ Menon said at the SuperReturn Asia conference in Singapore. Event organizers said about 1,500 private equity and venture capital investors registered for this year’s conference, more than double the number of delegates when it was last held in 2019, before the pandemic wreaked havoc on the global economy.
With the global economy facing several headwinds, including severe deflation, rising inflation, rising geopolitical tensions, and rising climate change risks, Menon said private credit investors are well positioned to seize lending opportunities in Asia and the world. “Given that private credit is higher in a company’s capital structure than private equity, the former can also provide investors with better protection during a downturn,” he added.
MAS allocates funds to private credit investors as part of the Private Markets Program introduced in 2018 with $5 billion in seed funding. Since then, about $2.2 billion has been allocated to private equity and infrastructure fund managers, who have committed to expanding their assets under management in Singapore, with some setting aside their Lyon office as their regional headquarters.
โSingaporeโs connectivity and ecosystem provides an ideal starting point for private equity and venture capital managers to seize opportunities in Asia,โ Menon said. โSingapore enjoys political and economic stability, well-regulated financial markets, excellent digital transportation and connectivity, a pool of skilled talent, and extensive business links with the Association of Southeast Asian Nations.โ
In 2021, assets under management for private equity and venture capital firms in Singapore increased 42% to S$555 billion (US$394.4 million), according to MAS. It added that as of June this year, there were 428 private equity and venture capital managers in Singapore, compared to 336 at the beginning of last year.
The growing presence of private equity and venture capital investors in Singapore has led to the growth of start-up companies in the country. The city-state is home to about a dozen unicorns and more than 9,300 startups, the largest proportion of any country in Southeast Asia, according to a study published by KPMG and HSBC in July. โTo make private equity and venture capital investment opportunities more accessible, we now have private market platforms in Singapore such as ADDX and CapBridge,โ Menon said. “MAS is solidifying more of these platforms here.”
