Private credit is booming because it gives investors a great way to diversify, so what can it do for you, how do you get started and why do you need to invest through an established and reputable private credit provider like Acuity Funding?
By Jacquelene Pearson
Scale and simplicity are two of the greatest strengths of the burgeoning global private credit market for investors seeking an alternative to the traditional asset classes of cash, shares or direct property.
Portfolio diversification, particularly for high-net-worth individuals, family offices and private companies is the other clear advantage of tapping into growing international demand for capital across infrastructure, industrial property, aviation and transportation, mining and exploration, energy, recreation and large-scale property development.
Investing in private credit basically means competing with banks and other traditional lenders by lending a slice of your portfolio pie to public or private companies, or even state-owned enterprises who are prepared to reward you with a handsome and competitive rate of return.
The greatest risk facing private credit investors is debtor default – the risk that the entity you lend your capital to fails to meet their interest repayments and/or loses the capital you invest.
The best way to minimise default risk when investing in private credit is to deal with a reputable, experienced and successful private credit expert, such as Acuity Funding.
Acuity’s founder and CEO, Dr Ranjit Thambyrajah, says the market for private credit is growing exponentially particularly in South-East Asia where even state-owned enterprises require a diversified supply of capital to keep sovereign debt at reasonable levels whilst providing the infrastructure and facilities expected in growing economies and markets.
“Borrowers, from mid-size private companies to huge public-private partnerships are increasingly attracted to private credit over traditional bank lenders because it is far more flexible, customizable and processing times can be faster,” Dr Thambyrajah says.
“Acuity has a strong and mature position as a successful disruptor in the private credit market so we are able to negotiate competitive yields for our investors while working with borrowers to ensure extremely low default rates,” he said.
“We have unique skills and experience that set us apart from our competitors. In addition to conducting all the normal credit risk screening, we work with potential borrowers to address any problems they have, restructure their enterprise and then, when they are in tip-top shape, we assist with the organisation of finance.
“I have been known for my business re-engineering talents for decades and I use them to make sure the borrowers we deal with are in good shape before entering a loan. We may also take equity in the businesses we deal with to further strengthen their ability to succeed,” Dr Thambyrajah said.
“Loan duration is also flexible which means private credit investors are able to structure their portfolios and timeframes to complement their holdings in traditional sectors such as cash and equities.”
Most organisers of private credit have relatively short-term loans but our average loan duration is 20 years and we can go as long as 40 years. This is a great way for private investors to further diversify their portfolios between short- and long-term bonds.
Dr Thambyrajah said the opportunities to invest in private credit are growing every year as borrowers seek alternatives to conventional bank loans and have a preference for working with funding sources, like Acuity, who have a deep understanding of their needs and are prepared to partner with them.
“We work with borrowers through public-private partnerships, build-operate-transfer and build-transfer structures to provide our expertise to the project and ensure investor risks are minimized.
“This is Acuity’s point of difference and what sets us apart from others in the private credit sector. Investors interested in learning more about our competitive advantage can contact us via calling 61 2 9484 0609 or emailing contacts@acuityfunding.com
