Asian private credit fundraising has sunk to a 12-year low, with just five Asia-based funds closing in the first half of 2024, raising $1.2bn. This compares sharply with 29 funds raising $9.5bn in 2023 and 53 funds raising $20.2bn in 2022, according to Pitch Book data. If the current pace continues, 2024 will be the quietest year for the sector in over a decade.

Investors are retreating amid high-profile corporate bankruptcies, favouring large US managers over Asian competitors. "In this time of market stress, investors are relying on the big boys to deliver," said Justin Tan, head of financial services in Asia at LEK Consulting. Sean Hung of Moody's expects Asian investors to reduce commitments over the next 18 months due to macroeconomic uncertainty and elevated rates.

Despite the pullback, some large allocators remain active. Temasek plans to increase its private credit exposure from 2% to 5% by 2031. KKR closed a $2.5bn Asia-Pacific fund in December, while Temasek's Seviora recently completed a $400mn collateralised fund obligation with Churchill Asset Management, half targeting Asia.