Global investment banking giant Goldman Sachs has secured a significant boost for its private credit ambitions in Asia. The firm signed a strategic partnership with Mubadala Investment Company, the sovereign wealth fund of Abu Dhabi, committing $1 billion to co-invest in private credit deals across the Asia-Pacific region.
This collaboration, announced in late February 2024, establishes a separately managed account (SMA) where both parties will contribute capital. The focus will be on identifying and executing private credit investments throughout the Asia-Pacific region, with India emerging as a primary target market. This aligns with Mubadala's stated goal of doubling its exposure to Asia by 2030, capitalizing on the region's dynamic economies and diversifying its investment portfolio.
The deal strengthens Goldman Sachs' position in the burgeoning Asian private credit market. The firm currently manages roughly $110 billion in private credit assets globally and aims to double that figure in the coming years. This partnership with Mubadala provides Goldman Sachs with not only substantial capital but also a trusted partner with deep local knowledge and expertise in the Asian market.
Mubadala, with its vast resources (approximately $300 billion in assets under management), is not new to private credit investments in Asia. The firm has previously partnered with alternative investment managers like Ares Management Corporation and Blue Owl. This collaboration with Goldman Sachs reflects their continued commitment to the region's growth potential and their confidence in Goldman Sachs' asset management capabilities.
Industry analysts view this partnership as mutually beneficial. Goldman Sachs gains access to Mubadala's capital and regional insights, while Mubadala leverages Goldman Sachs' established presence and proven track record in private credit investing. This deal is expected to generate significant deal flow for both parties in the coming years.
The agreement comes on the heels of a similar mandate Goldman Sachs received from the Ontario Municipal Employees Retirement System (OMERS) in September 2023. This suggests a growing investor appetite for private credit in Asia, particularly among institutional investors seeking higher returns compared to traditional asset classes.
The rise of private credit in Asia is attributed to several factors. Banks have become more cautious in lending to certain sectors, creating a gap that private credit firms are well-positioned to fill. Additionally, there is a growing pool of mature companies in the region seeking alternative financing solutions for expansion and acquisitions.
With this significant partnership, Goldman Sachs and Mubadala are poised to become key players in driving the growth of private credit in the dynamic Asia-Pacific market. Their combined expertise, capital, and regional focus will likely shape the landscape of private credit investments in the years to come.