DBS Group to originate private credit deals
Singapore’s DBS Group plans to originate and distribute deals in the private credit space.
However, the bank is unlikely to handle direct lending transactions itself in order to avoid potential conflicts of interest. Instead, the company is likely to pair up clients with private credit providers, while originating and distributing new deals.
According to Bloomberg reporting, Clifford Lee, the global head of fixed income at DBS Group, confirmed the bank’s plans in a recent interview.
“Do we keep what’s best and sell what’s worse?” Lee asked.
“There’ll always be that mindset if you are both an investor as well as a distributor of credit.”
Read more: Nomura taps into private credit boom
He added that given the very different risk profile of depositors and private credit investors, “the bank can come in at a more senior level. This way, we are not clashing.”
It is the latest sign that global financial institutions are cashing in on the boom in the private credit market. This week, Citigroup was reported to be rolling out a new direct lending strategy in the early part of next year.
DBS is not a stranger to the private credit space. Earlier this year the bank invested $200m (£159.08m) with Muzinich & Co’s first Asia private credit fund. Following the investment, Lee was made a member of the fund’s investment committee. However, Lee said that he will not vote on deals originated by DBS, allowing the Muzinich fund to remain independent.
Lee added that he is bullish on the potential opportunities for private credit in Asia.
“Increasingly in cases where the structure is clear, such as in the case of a leverage buyout or real estate refinancing with high loan-to-value, banks are starting to step up,” Lee added.
“This is specific to Asia.”
Read more: Goldman Sachs bullish on private debt in 2024