Private credit managers are increasingly focusing on emerging markets as they initiate new fundraising efforts, driven by a notable rise in deal activity this year. Currently, emerging markets represent less than 10% of total private credit investments, in an industry valued at approximately $1.7 trillion globally. This underrepresentation is attributed to historical concerns surrounding the enforceability of contracts, currency volatility, and political instability in developing nations.
Among the key players, Ninety One Plc is planning to close a new fund in the first quarter of 2026 with a target of $500 million. Additionally, the firm has ambitions for another fund set to launch by the end of next year. Meanwhile, Gramercy Funds Management has made significant strides, having already raised $760 million and is in the process of raising an ambitious $1.5 billion for a new fund. These initiatives highlight a growing confidence among private credit managers in the potential of emerging markets.
To further stimulate investment in these regions, the International Finance Corporation (IFC), which is the private sector lending arm of the World Bank, has launched a $510 million collateralized loan obligation deal specifically targeting emerging markets. This initiative is particularly noteworthy as it opens up investment opportunities that typically fall below the thresholds required by US-based private credit firms.
The strategic rationale behind these moves stems from the recognition that emerging markets present untapped potential for private credit investments, with the expected benefits including enhanced diversification and the potential for higher returns amidst increasing global economic integration. As private credit managers navigate these challenges, they aim to adapt their investment strategies to capitalize on the unique opportunities presented by these markets.
The timeline for Ninety One Plc's fund is set for the first quarter of 2026, with Gramercy Funds Management also moving forward with its fundraising efforts throughout the upcoming year. Investors are eagerly awaiting the impacts of these initiatives, which could influence shareholder value and employment within these firms, as well as contribute to broader market dynamics as emerging markets gain traction in the private credit landscape.
From a regulatory standpoint, the success of these fundraising efforts will likely depend on navigating various compliance and regulatory requirements associated with investments in emerging markets. As these private credit managers embark on this journey, they will need to address potential hurdles related to local regulations and economic conditions, ensuring that their investments align with both investor expectations and regional governance frameworks.