Sovereign wealth funds are pivoting into emerging-market private credit to diversify away from crowded US investments, Bloomberg reports. Despite representing just 4% of global fundraising since 2008, the sector saw record activity in 2025. Managers like Gemcorp Capital and Ninety One plan multi-billion dollar raises for 2026, citing strong interest from state-backed investors.

This shift reflects a broader search for higher risk-adjusted returns as traditional portfolios become concentrated. Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund have already executed deals, often partnering with global firms like Apollo. Africa and Asia are prime targets, with Gemcorp targeting $1bn in Africa and Asia seen as a regulatory fit for insurers.

Risks remain, including legal complexity and weaker creditor protections. Latin America’s market is nascent, with 2025 fundraising at $1.3bn, down from $3.6bn in 2024 but still above decade-ago levels. The trend suggests sovereign capital will continue expanding into these regions, seeking diversification and yield in a low-rate world.