How to avoid the pitfalls in private credit

Steer clear of mezzanine in Asia and China NPL funds, says Hamilton Lane. The private markets investor's ideal credit portfolio is a blend of special situations and direct lending.

Private markets investor Hamilton Lane sees traps lying in wait for the herd of institutional investors rushing to buy private debt instruments in Asia.

There is too much cash waiting to be deployed into distressed debt in China while mezzanine in Asia is too risky for the slim reward the product offers, Juan Delgado-Moreira, a managing director at the Pennsylvania-headquartered firm, told FinanceAsia in an interview.

His advice is to pick fund managers who can source complex special situations or have found a lucrative way of lending directly to Asia’s rising middle class or to smaller, privately owned companies struggling to secure a...

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