📒 Quick Take: Asia Private Credit’s Reality Check
Asia’s private credit boom has turned into a reality check for some of the funds operating in the region.
The emergence of private credit as an asset class in Asia doesn’t remove its structural shortcomings.
While Asia’s private credit market has shown some fissures, it’s unlikely to run out of players who bet that they can exit in time and make money.
Asia’s private credit boom has turned into a reality check for some of the funds operating in the region.
Six months ago, I wrote that private credit funds were mushrooming in Asia, lured by opportunities ranging from scooping up distressed commercial property in Hong Kong to getting juicy returns from Indian borrowers. However, I noted that the ability to recover a loan when it goes bad is the key differentiator in this increasingly crowded landscape.
Bloomberg reported several cracks that have started to appear:
BlackRock Stumbles in Asia Private Credit Push, Forcing Rethink (26 November 2025)
Private Equity Firm Gaw Secures Last-Minute Loan Extension (25 November 2025)
Deutsche Bank’s DWS Cuts Asia Private Credit Team in Shift (21 November 2025)
Global Investment Firm Arena Investors to Shut Singapore Office (3 October 2025)
Private credit funds – which typically have a higher risk appetite and flexibility to structure their facilities – can provide an additional financing option for borrowers. However, the emergence of private credit as an asset class in Asia doesn’t remove its structural shortcomings.
First, some borrowers who turn to private credit are those that cannot get cheaper financing elsewhere, for reasons such as weak cashflow, high capital requirements, or a challenging business environment. In short, the demand for private credit usually comes from companies mired in a cash crunch.
Second, the effectiveness of the protections negotiated by the private credit lenders would hinge on their ability to enforce these loans, especially in jurisdictions that are seen to favour the borrowers.
The private credit lenders of Visi Media Asia – the media arm of Indonesian conglomerate Bakrie Group – slogged to get their voting rights affirmed in a local in-court restructuring (PKPU) last year after the administrators allegedly sought to disenfranchise them. Visi’s restructuring scheme that was eventually passed might have been slightly better than the initial proposal, but it was hardly a happy ending for the lenders.
Ares Management and Tor Investment Management also had to fight to enforce a USD 200 million loan to Indonesian shopping mall operator Supermal Karawaci and another company controlled by local businessman David Salim. Acrostics Asia broke the news last month that these lenders secured a rare court victory that should pave the way for them to replace Supermal Karawaci’s directors and commissioners.
I cautioned back then that “anything can happen in Indonesia, so it ain’t over until it’s over.” True enough, the incumbents have put up a resistance to the court ruling, potentially prolonging the tussle, according to two friends familiar with the matter.
Party Time
Despite the apparent risks, the private credit party is still raging in India.
The value of private credit investments jumped 53% to USD 9 billion in the first half of 2025 from a year earlier, according to an EY report. This was led by the USD 3.1 billion raised by Shapoorji Pallonji Group’s Porteast Investments for refinancing, which was the largest-ever onshore private credit transaction in India.
Underscoring the exuberance, Shapoorji Pallonji is reportedly back for another borrowing of up to INR 230 billion (USD 2.6 billion). The three-year borrowing for the Indian group’s property arm, Goswami Infratech, comes amid increased speculation over how the conglomerate will monetize its 18.37% stake in Tata Sons, IFR reported.
Potential lenders are probably hoping to strike a lucrative deal like the USD 1.25 billion facility bagged by Vedanta Resources in late 2023. Not only did it offer an overall return of around 20%, the 2.5-year loan also gave the lenders access to Vedanta’s cashflows, mainly in the form of dividends and “brand fees” from its subsidiaries.
I previously wrote that Vedanta got the timing right as it was able to ride the tide and rebuild the confidence of bond investors. “Asia’s high-yield market is essentially a game of musical chairs where lenders pass a credit to each other and hope that the music doesn’t stop prematurely,” I noted.
Banks and bondholders usually swapped seats with each other, but the game has benefitted from the entry of private credit firms as a third player. Apart from participating in this capital recycling exercise, private credit funds can also bridge the gap in areas where banks retreated, such as for environmental, social and governance (ESG) considerations.
Last week, Indonesia’s Chandra Asri Group announced that it had secured a USD 750 million facility from KKR to finance its planned acquisition of ExxonMobil’s Esso-branded petrol stations in Singapore.
Asia’s private credit market has shown some fissures in recent months, but it’s unlikely to run out of players who bet that they can exit in time and make money.