SINGAPORE, Sept 11 (Reuters) - Real estate private equity firm Gaw Capital Partners is looking to deploy $2 billion to $3 billion in the private credit sector over the next two years, its chairman said on Monday.
"Private debt, backed by real estate, is probably the best risk adjusted return on anything out there," Goodwin Gaw, chairman of Gaw Capital told Reuters in an interview on the sidelines of the Forbes Global CEO conference in Singapore.
"You can take more risks and get into (20% or higher of) IRR but if we can get 15%, 16% with that kind of risk profile, you don't need to take more risks," he said, referring to internal rate of return, which measures the profitability of investments.
Hong Kong-headquartered Gaw Capital, with $36 billion under management, expects opportunities in the private credit space, which consists of debt that is not traded on public markets, in Hong Kong, South Korea, Vietnam and Australia, co-founder Gaw said.
The firm has deployed about $1.5 billion into the private credit sector over the last two years, Gaw said.
Gaw Capital's big push comes as global investors are pouring money into multi-billion dollar credit funds, including those of Apollo, Blackstone and KKR, hoping to ride on the boom in the Asian private credit industry.
Worries over asset valuations, uncertainties in public markets, rising interest rates and weakening global economic growth have spurred investors to boost their private credit exposure.
Founded in 2005, Gaw Capital has raised seven funds totalling $23 billion in equity targeting the Asia Pacific, according to its website. It also manages funds in the U.S. and Europe, and offers credit investments, among others.
Some of Gaw Capital's recent investments included the acquisition of the Florentia Village Guangzhou outlet mall in Guangdong in China and the purchase of the Hyatt Regency Tokyo in Japan with KKR.
Gaw said China's property sector, which has been struggling since 2021 because of debt and weak consumer demand, is suffering more from a crisis of confidence rather than a lack of interest from investors.
The latest blow has been major developer Country Garden's struggle to avoid defaulting on domestic and offshore debt, as fears grow that the crisis could spread to the financial sector and derail a sputtering economic recovery.
"I still feel medium term bullish. Short term it's very difficult to pick a direction because we're all waiting for a more clear signal from the government on what policies (they) are going to come up with to induce consumers to start buying real estate again," Gaw said.
"Right now it's less of an availability of capital to invest in real estate in China than a lack of confidence, and the lack of confidence comes from people not sure whether the market will continue to drop," he said. (Reporting by Yantoultra Ngui; Editing by Christian Schmollinger)