Mubadala partners with Goldman for $1 billion private credit venture in Asia

Mubadala partners with Goldman for $1 billion private credit venture in Asia

Mubadala Investment Co., the Abu Dhabi sovereign wealth fund, has teamed up with Goldman Sachs Group Inc. to invest $1 billion in private credit opportunities in Asia, especially in India

The partnership, announced on Monday, will allow Mubadala and Goldman’s asset-management arm to co-invest in the fast-growing private credit market in the Asia-Pacific region, which offers higher returns than traditional debt instruments. The deal will also help Goldman expand its presence and network in the region, where it sees strong demand for alternative financing solutions

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“This partnership is progress toward executing the goals and targets we outlined at our investor day in February,” said Marc Nachmann, Goldman’s global head of asset and wealth management, in a statement1. He added that the deal “allows us to focus on the execution of our premier ultra-high net worth wealth management and workplace growth strategy.”

Goldman Strikes

The private credit market, which provides loans to companies and private equity firms that are not accessible through public markets, has grown rapidly in recent years, reaching $1.7 trillion in assets under management in 20201. Investors have been drawn to the asset class by its higher yields, lower volatility, and diversification benefits.

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However, the market also faces challenges such as increased competition, regulatory uncertainty, and rising defaults amid the Covid-19 pandemic. Some investors have also raised concerns about the environmental and social impacts of private credit lending, especially in emerging markets.

Goldman has been one of the leading players in the private credit space, with more than $100 billion in assets under management across various strategies. The bank has also been seeking to diversify its revenue sources and reduce its reliance on volatile trading and investment banking activities. In September, Goldman secured a similar $1 billion mandate from the Ontario Municipal Employees Retirement System to invest in private credit deals in North America.
Mubadala, which manages about $243 billion in assets, has also been active in the private credit market, as part of its strategy to generate long-term returns and support the economic diversification of Abu Dhabi1. The fund has partnered with other asset managers such as Apollo Global Management Inc. and BlackRock Inc. to invest in private debt and equity opportunities.
The deal with Goldman is the latest example of the growing collaboration between Middle Eastern and Asian investors, as they seek to tap into each other’s markets and expertise. Mubadala has also invested in several Asian companies, such as Reliance Industries Ltd., Jio Platforms Ltd., and Flipkart Online Services Pvt., in sectors such as technology, e-commerce, and energy

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Source : yahoo finance

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