Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
GSAM is one of a handful of asset managers with a QFII license, in this case for $200 million, which the firm says was oversubscribed several times. It has marketed the fund to pension funds and other institutions in Europe, Japan and other Asian countries other than China. A small amount has also been allocated to high-net-worth clients.
Vincent Duhamel, Hong Kong-based managing director for Asia ex-Japan at GSAM, says the firm intends to ask the China Securities Regulatory Commission for an additional quota. But in the meantime the fund needs to establish a track record.
Kenny Tjan, GSAMÆs Singapore-based co-head of Asia ex-Japan portfolio investments, will manage the fund. The firm also has a desk of equity analysts in Shanghai that will cover ChinaÆs companies.
Duhamel says the firmÆs strategy has been to get to know Chinese institutions and high-net-worth individuals and manage their international assets; to build an onshore research team that learns the A-share market; and now to manage assets in China for international clients.
Eventually, the firm hopes to have an onshore business for domestic clients, but that depends on eventual liberalisation. Duhamel says GSAM is unlikely to pursue a joint venture. Via Goldman Sachs, GSAM has potential partners in China for any projects that may arise, including the bank's JV partner, Gaohua Securities.
ôWe need a domestic strategy for China, Korea and India,ö Duhamel says. ôThis is the first step.ö
Although he wouldnÆt comment on potential returns in the new A-share fund, he says tracking error will be commensurate with an emerging market, in the 4-6% range. The fundÆs mandate is to be fully invested in A-shares, and will not take any asset allocation decisions.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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Investors are increasingly turning to private companies and private debt in their hunt for ESG alpha, but the age-old problem of transparency and due diligence remains