Mubadala and Goldman Sachs in $1bn Asia-Pacific private credit investment partnership

Companies will seek opportunities in India as they aim to expand presence in the booming region

The Mumbai skyline. Mubadala is investing heavily in Asia's third-largest economy. AFP

Abu Dhabi sovereign investor Mubadala Investment Company and Goldman Sachs have signed a $1 billion partnership to co-invest in private credit opportunities in the Asia-Pacific region.

The partnership will be managed by the private credit team at Goldman Sachs Alternatives, with an on-the-ground team across several Asia-Pacific markets, the companies said in a joint statement on Monday.

They plan to invest $1 billion in long-term capital in “high-quality” companies across the private credit spectrum in the region, with a particular focus on India.

“The diverse and rapidly growing economies, as well as the increasing private equity deal volumes, are significantly driving demand in [the] Asia-Pacific for customised credit solutions from non-traditional lenders,” said Omar Eraiqat, deputy chief executive of diversified investments at Mubadala.

The partnership will boost Mubadala's private credit exposure in the Asia-Pacific region, which “is central to Mubadala’s strategic growth initiatives”, he said.

Demand for private credit – lending to companies by financial institutions other than banks – has grown significantly in recent years.

Unlike most bank loans, private credit solutions can be modified to meet borrowers’ needs in terms of size, type or timing of transactions.

The size of the private credit market is estimated to grow to $2.3 trillion by 2027, from about $1.4 trillion at the start of 2023, according to a report by Morgan Stanley.

Goldman Sach's global private credit team currently oversees more than $110 billion in assets under management, with a presence across the Asia-Pacific region.

Last year, the company opened an office in Abu Dhabi Global Market to boost its regional presence and forge closer ties with key domestic players.

Goldman Sach's partnership with Mubadala is expected to enable both businesses to continue scaling their investment activity in the growing Asia-Pacific credit market, they said.

The opportunity in private credit in the Asia-Pacific region is “expansive”, said Greg Olafson, global head of private credit at Goldman Sachs Alternatives.

“With strong economic growth in the region and favourable conditions for private lenders to support the growth of leading companies by providing flexible, long-term capital, we believe we are at the early stages of a defining era for private credit in [the] Asia-Pacific.”

Global investors are increasingly allocating resources to the private credit market, with a host of banks and asset managers pouring capital into the fast-growing industry.

Mubadala’s credit investments unit focuses on direct lending to middle market and large cap companies across several industries and asset classes.

In September, Mubadala teamed up with New York-based alternative asset manager Blue Owl Capital to co-invest in private credit opportunities.

The partnership was established with a $1 billion commitment to Blue Owl’s credit platform and will initially focus on its technology lending strategy, which provides financing solutions for several technology and software companies, Mubadala said at the time.

In January last year, Mubadala also signed a joint venture with Alpha Dhabi Holding, a unit of Abu Dhabi's International Holding Company, to co-invest in private credit opportunities.

Fabrizio Bocciardi, head of credit investments at Mubadala, said that India, in particular, stood out as a key market with “significant opportunities in private credit”.

India remains a key focus for Mubadala, which manages more than $284 billion in assets globally and plays a key role in the UAE's economic diversification strategy.

Last year, Mubadala revealed new investment deals in India as part of its expansion in the world’s most populous country.

In April, Mubadala and the British Columbia Investment Management Corporation, a Canadian pension fund, became anchor investors in Cube Highways Trust, an infrastructure investment trust in India.

This month, the company also said it was investing in India’s Manipal Health Enterprises as part of its continued expansion in Asia’s third-largest economy.