Alpin Mehta, head of private equity solutions at Temasek Partnership Solutions (TPS), says that private credit provides more diversification and resilience to earnings, and is an “important” part of Temasek’s portfolio. “Our focus there is to build a portfolio which is diversified across sectors, across markets, but also diversified across corporate lending, asset-backed financing, as well as real estate financing,” he explains. “What we like about that is that it offers us a very, very attractive risk-adjusted return with significant downside protection and equity subordination.”
Despite mass withdrawals by investors from private credit funds over the past year, Temasek International (Temasek) remains unfazed. It is taking a high-conviction investment approach to this asset class, seeking to double its portfolio allocation over the next five years.
Over the last 10 years, Temasek’s exposure to private credit has grown more than sixfold to make up more than 2% of Temasek’s total portfolio. By FY2031 ending March 31, the sovereign wealth fund intends to have 5% of its portfolio in private credit, presumably due to the asset class offering stable equity-like returns at a lower risk compared to private equity.
