BRISBANE: Australia’s sovereign wealth fund has been adding distressed debt investments to its hefty private markets portfolio as it sees more potential deals across the global credit landscape.
“On the distressed side, there are some pockets of opportunity, particularly in real estate and some private equity,” said Future Fund chief executive officer Raphael Arndt, adding that the fund wasn’t seeing a broad underperformance in credit. “We have moved some money into some of those strategies.”
Arndt was speaking to reporters yesterday about the A$225bil (US$151bil) fund’s latest results, which posted a 9.1% annual return thanks to buoyant stocks and strong private markets.
He said distressed debt had become an area of focus for managers, citing the need for lenders to offload some of their riskier investments.
“We’re seeing opportunities through regulatory arbitrage strategies around the world, where banking regulators are putting more and more onerous conditions on banks holding assets,” said Arndt.
“It becomes quite attractive for us to buy those assets off banks. As long as you do the credit work, we think the credit quality is fine.” — Bloomberg
