Lending To Alternative Lenders In Southeast Asia
Ever wondered what it’s like to be a private credit manager that specializes in lending to “alternative lenders” in Southeast Asia?
This evening, ADDX guests had the chance to do just that at the offices of Helicap where we learnt much about this emerging private credit space.
Here are some highlights:
Did you know that there are more than 35,000 non-bank lenders and financial institutions (e.g cooperatives and fintech lenders) in Southeast Asian countries like the Philippines and Indonesia that require additional capital to further serve their under-banked populations?
This creates a large financing opportunity of roughly USD500bn in the Southeast Asia micro, small and medium enterprises space which today face a shrinking supply of credit from traditional banks. Furthermore, MSMEs account for 97% of all enterprises in SEA, contributing to 41% of the region’s GDP.
Moreover, the ability for select private credit managers to identify which financing needs can be met and repaid in this unpredictable environment, is built on: having a solid understanding of the underlying business models, due diligence, loan structure, loan tenor, credit analytics, diversification… just to name a few.
Additionally, private credit managers that can harness the power of innovation and technology to assist with risk management, such as in the active monitoring of their borrowers’ loan books, can have a more systematic way to proactively manage risks.
Generating consistent income-distributing returns year after year, including in a difficult 2022, is not by chance. DISCIPLINE, DIVERSIFICATION, DILIGENCE & ADAPTING to today’s risks and opportunities are key.
In conclusion, thank you for the great partnership and collaboration David Z Wang and Quentin Vanoekel. Furthermore, to our guests, thank you for coming. In addition, for asking the difficult and technical questions! Lastly, it is through asking that we all learn together!
Written by Nicole Lee
Head of Private Client Group at ADDX and spent nearly 13 years at UBS Wealth Management in the Chief Investment Office.
Sources: IFC, WorldBank, Asian Development Bank
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Lending To Alternative Lenders In Southeast Asia
