US alternative investment manager Monroe Capital LLC is diversifying its offerings to tap into Asian investors’ interest in private debt, according to Alex Kim, the company’s newly-minted Asia head.
Kim joined Monroe from Aberdeen Standard Investments in July when the Chicago-based firm, which has around US$11.3 billion of assets under management currently, set up its first Asian office in Seoul, the South Korean capital.
Asia Pacific currently accounts for only 1% of Monroe’s assets under management.
According to Kim, greater allocation to alternatives by top Korean institutional investors like Korea Investment Corporation (KIC) and National Pension Service will open up more investment opportunities for the company.
KIC, for instance, plans to invest as much as 25% of its total assets in non-mainstream asset classes by 2027, up from the current 16%.
“Private credit investments currently are not managed within their own departments and are generally overseen by the organisations’ multi-asset or strategy teams, but they may need to develop a dedicated team for private credit, and manage investments as a standalone asset class,” Kim says in an interview with Asia Asset Management.
He says direct private credit specialists like Monroe traditionally excel at direct and small- and mid-cap strategies. He expects Korean asset owners to hire smaller-sized firms like Monroe in order to diversify their private debt investments.
Overall, he says Asian investors are still underinvested in private debt. He expects them to allocate more to private debt for the relatively stable yields and better inflation protection characteristics compared to other fixed income assets.
Monroe currently has a diverse range of private credit offerings, from direct lending to opportunistic commingled funds and collateralised loan obligations.
Kim says the company is looking to launch a healthcare and technology focused offering as demand from yield-seeking investors benefits certain sectors in the wake of the coronavirus crisis.
