On Monday, Abu Dhabi’s sovereign wealth fund, Mubadala Investment Company, announced a $1 billion agreement with Goldman Sachs to explore private credit opportunities in Asia. This strategic partnership represents a significant entry for the U.S. bank into the Asian market, recognizing it as a pivotal driver for the demand in private debt products. The collaboration marks the latest expansion for Goldman’s global private credit business, overseeing assets exceeding $110 billion worldwide. As part of its growth strategy, the unit has established a semi-liquid private credit platform in Europe and is actively bolstering its presence in the Asia-Pacific region to capitalize on emerging opportunities, as highlighted by Marc Nachmann, the head of global asset and wealth management at Goldman Sachs.
The deal with Mubadala, which runs a $276 billion portfolio across six continents, is aimed at expanding its exposure to Asia, the world’s fastest-growing economy and one of the most significant growth markets for private debt, a funding channel where businesses can raise funds through tailored financing products from non-bank lenders. Private credit, which has seen its share of capital grow amid elevated borrowing costs and interest in higher returns, is now a $1.5 trillion market worldwide.
Private debt investors have been looking to diversify their allocations as yields on equities have fallen. While investments in North America and Europe still make up a significant proportion of Mubadala’s portfolio, it has been shifting to developing markets, especially those where it is underweight, such as China and India, said Camilla Macapili Languille, head of the fund’s life sciences and healthcare division.
Mubadala and Goldman will jointly invest in multiple Asia Pacific markets across the private credit spectrum, focusing on India. The partnership will be managed by the Goldman Sachs Alternatives private credit team, which has 165 credit investment professionals who work to source and underwrite global lending opportunities. “The diverse and rapidly growing economies of Asia Pacific are driving demand for customized credit solutions from non-traditional lenders,” said Omar Eraiqat, Mubadala’s deputy chief executive officer, Diversified Investments.
Both firms are looking to tap into Asia’s fast-growing economy and strong demand for infrastructure and consumer goods, helping fuel an expansion of the world’s largest global trade bloc, the BRICS group of emerging markets, including China, Russia, and Brazil. Several significant Middle East sovereign wealth funds and family offices have also invested in the region, as have private equity managers such as Blue Owl Capital Inc and Ares Management Corp.
