Sadiq Hussain, senior executive officer, Seviora (Middle East) Limited, talks to Economy Middle East about the firm’s history of providing private credit to Asian businesses, its extensive on-the-ground presence in the continent, and plans to leverage Temasek’s wider ecosystem in opening up growth opportunities for Middle Eastern companies.
Seviora’s expansion into the UAE represents a strategic move to bridge capital flows between the Middle East and Asia. What specific opportunities can you identify in this cross-regional dynamic, and how is Seviora uniquely positioned to capitalize on them?
Seviora’s new office in the ADGM enables us to tap into the region’s expanding asset management industry, with a focus on strengthening ties, raising capital from and co-investing with institutional investors, family offices and regional banks who wish to gain access to Asia, as well as thought leaders and the broader ecosystem.
As Middle East investors seek to diversify their investment portfolios, Asia is becoming increasingly interesting to them as a dynamic, young and heterogeneous region with deep capital markets offering a diverse pool of investment opportunities and attractive returns. Seviora can be a gateway for Middle East investors into Asia.
As an asset management group wholly-owned by Temasek — Singapore’s sovereign wealth fund — we can harness Temasek’s ecosystem of corporates and asset managers for deal sourcing, due diligence and value creation, leveraging its presence in Singapore, India, China and Vietnam. With over $54 billion in Assets Under Management (AUM), Seviora has investment capabilities in both private and public markets.
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Asian private credit has emerged as an increasingly attractive asset class for regional investors. What structural factors are driving this interest, and how does Seviora differentiate its approach in this space compared to other asset managers active in the region?
For years, investors viewed Asia as too fragmented and heterogeneous, preferring the ease of US private credit — one country, one currency, one legal system. But today, that mindset is shifting. With investor demand driving down yields in the West and global politics becoming increasingly uncertain, it’s time to reassess Asia’s role in private credit portfolios.
Loans in Asia are often over-collateralized by hard assets and typically include personal and corporate guarantees. In some cases, private credit lenders even secure direct board representation, allowing them to actively engage the borrower. Over-collateralization and highly tailored structures can help mitigate the risks typically associated with financing of Asian corporates, improving the overall risk-reward profile despite the borrowers often being more complex.
While these loans may come with additional challenges, the combination of collateral backing and disciplined underwriting enhances the attractiveness of private credit in the region. For private credit lenders, the allure of corporate and special situations financing lies in the ability to capture significant yield premiums.
According to Pitchbook LCD and Bloomberg, spreads in Asia’s private credit market are, on average, 200 to 500 basis points higher than the JACI High Yield Index, offering a premium over US and European private credit markets. This means that Asia offers investors a meaningful yield pick-up.
To mitigate risks, private credit lenders in Asia Pacific structure deals with stringent covenants and a range of collateral protections, including real estate, listed shares, personal and corporate guarantees, and equity kickers.
Having invested over $3 billion across 45 loans, with our extensive Asian roots, unique ecosystem and access to all borrowers’ profiles from small to mid-size all the way to large corporates, is what truly differentiates our Asian private credit capability.
Our current private credit fund — with a size of $1.3 billion — focuses on larger Asian corporates with loan requirements of typically between $50-$150 million or 5-15 percent of fund size. In this less crowded space borrowers are generally well established after having gone through different business cycles.
Beyond Asian private credit, what alternative investment opportunities do you believe offer compelling value propositions for both institutional and private wealth investors in the Middle East, particularly in light of evolving geopolitical considerations?
We see interesting private equity opportunities across Asia Pacific, particularly in SMEs in Southeast Asia. With an emphasis on scalable growth and value creation, we have committed over $400 million in buy-and-build strategy, in sectors such as healthcare services, consumer and business services.
Our SeaTown Private Equity team constantly monitors and engages with our portfolio companies to assess the impact of ongoing geopolitical developments. Hence, our team has been strategically focused on sectors that will continue to be resilient, adopting a disciplined buy-and-build strategy targeted at mission-critical services.
Likewise, we have a pan-Asian venture debt strategy that is focused on providing credit to early-stage start-ups to late-stage high growth companies. This strategy also requires deep local knowledge and connectivity. Defaults have historically been low with attractive credit returns and further equity upside available via long-term warrants.
We think this is an interesting strategy given the high level of unicorns in the region — second only to the US and with characteristics that are uncorrelated to the US markets. In this space, over the past ten years we have provided a total of $1.7 billion of venture debt to 400+ start-ups in Asia and out of these, more than 50 became unicorns. These 400+ start-ups raised a total of $54 billion in equity funding.
As Seviora establishes itself within ADGM’s financial ecosystem, what are your top three strategic priorities for the region over the next 24 months?
At Seviora, we plan to extend and deepen our engagement with leading institutions in the Middle East, covering sovereign wealth funds, pension funds, banks, and family offices. We aim to work with these institutions to increase the diversification of their investment portfolio by raising exposure to Asia. We also want to form partnerships with like-minded Middle East institutions in the areas of co-investments, product development and distribution.
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