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.
The fund is at $100 million and would like to grow by a further 50% this year. Its theme is Greater China, including H-shares in Hong Kong and domestic A-shares in the mainland.
The CEO of the fund is Yip, who spent 10 years at Asian investment group GEMS alongside tai pan and former French Foreign Legionnaire, Simon Murray. Sun China's CIO is Ching, who was a managing director at HSBC overlooking the Greater China region. In charge of research is Nigel Chan, who covered Greater China and Hong Kong equities at Barings and then through that firmÆs subsequent reincarnations at ING and Macquarie.
ôI expect a little more downside as global markets are still grappling with lack of transparency and valuation of assets in the financial system,ö says Yip. ôThe problem is not confined to one subprime asset class any longer. That said, I think there are still opportunities.ö
For example, he says that some Chinese property stocks are down 50%, but their businesses are still relatively strong, with 30% earnings growth and single digit price-earnings ratios.
The Sun China Fund was down 11% in January. Last year, the Fund was up 43.1% since its launch in April 2007. The fund targets returns of 25% on low-teens volatility. Fees are 1.5% and 20%.
Gross exposure is typically around 150% (today standing at 100%) and net exposure is generally at 60%-70%. The fund can have maximum leverage of up to 200%.
Service providers for the fund include Goldman Sachs as prime broker, custodian and fund administrator, and Deacons as its law firm.
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