Everything you need to know about how private credit works, who it is for, what determines pricing, what collateral looks like across industries, and how to access it.
Published by
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
30 years of institutional finance. Former hedge fund founder. Senior roles at top global investment banks. GMG Capital Advisory arranges private credit and special situations finance of $10M–$100M for operating companies across Asia Pacific.
[email protected] | +65 9773 0273 | Singapore · Hong Kong | Asia-Pacific
Private credit is one of the fastest-growing segments of global finance. In Asia Pacific alone, assets under management in private credit strategies exceeded $150 billion in 2024 a figure that has more than doubled in five years. Yet for most business owners and CFOs, private credit remains poorly understood.
Private credit is not a last resort. For a growing number of Asia Pacific businesses, it is the first call.
What Is Private Credit?
Private credit is lending provided by non-bank institutions, a dedicated private debt fund, a family office, an insurance company, a specialist finance firm, or a high-net-worth investor group. The word 'private' refers to the nature of the transaction: a direct, bilateral agreement between borrower and lender, negotiated privately rather than arranged through a public market.
Because private credit lenders are not subject to the same regulatory capital framework as banks, they can lend in situations banks cannot, move faster, accept more complex collateral, and price for deal-specific risk rather than applying blanket sector restrictions.
Private Credit vs a Bank Loan: The Key Differences
Speed: Bank credit process typically 8–14 weeks. Private credit: 2–4 weeks. For time-sensitive acquisitions or working capital crises, this is decisive.
Deal size: Banks are raising minimum commercial deal sizes. The $10M–$100M range is precisely the segment most systematically abandoned.
Structure: Banks apply standardised templates. Private credit lenders structure around your specific transaction, collateral profile, and cash flow cycle.
Sector access: Banks maintain growing excluded sector lists. Private credit lenders assess each transaction on its own merits.
Relationship: With a bank, your credit decision is made by a committee that has never met you. With private credit, you deal directly with the principals making the decision.
Covenants: Bank covenants are maintenance-based, tested regularly. Private credit covenants are incurrence-based, triggered only if you take a specific action. Significantly more business-friendly.
What Determines Private Credit Pricing?
Collateral quality and liquidity: The single most important pricing driver. Strong, liquid, easily realisable collateral commands significantly better pricing than illiquid or specialised assets.
Loan-to-value ratio: The lower the LTV relative to collateral value, the better the pricing.
Clarity of repayment source: A transaction with a clearly defined, contracted exit price better than one with a vague refinancing plan.
Business cash flow quality: Contracted, recurring revenues from creditworthy customers price better than project-based or lumpy cash flows.
Tenor: Shorter-term transactions typically price tighter than longer ones.
Jurisdiction: Markets with reliable contract enforcement and efficient security registration price better than those with legal uncertainty.
Deal complexity: Cross-border structures, complex ownership, and regulatory complications add to the cost of underwriting and are reflected in pricing.
Collateral Across Industries
Data centres and digital infrastructure: Physical infrastructure, long-term power purchase agreements, co-location and hyperscaler offtake contracts, land and building assets.
Power generation and energy: Project cash flows underpinned by PPAs, plant and equipment, land rights, environmental permits, and carbon credit streams.
Biofuels and sustainable fuels: Feedstock supply contracts, processing plant, product offtake agreements, carbon credits, and land assets.
Hospitality and hotels: Real property value, brand licence agreements, management contracts, forward booking revenues, and F&B income streams.
Manufacturing and industrial: Plant and equipment, real property, raw material inventory, finished goods, trade receivables, and export contracts.
Real estate development: Land value, development approvals, pre-sales contracts, construction contracts, and developer equity.
Healthcare and medical: Licensed premises, specialist equipment, patient receivables, insurance receivables, and long-term service agreements.
Logistics and supply chain: Warehousing assets, vehicle and equipment fleets, long-term client contracts, and cold chain infrastructure.
Agribusiness and food production: Land and plantation assets, processing facilities, equipment, harvest offtake agreements, and export contracts.
Operating companies generally: Trade receivables, inventory, intellectual property, cross-company guarantees, and personal guarantees from HNWI business owners.
The right private credit lender does not just provide capital. They provide certainty and in business, certainty of funding is often worth more than the cheapest rate.
The Private Credit Process
Step 1: Initial conversation (Days 1–5)
A private credit lender will want to understand the business, the capital requirement, the repayment source, and the collateral available. Good private credit lenders form a preliminary credit view within days.
Step 2: Term sheet (Days 5–14)
If the lender has appetite, they issue a non-binding term sheet. Most terms are negotiable through direct dialogue.
Step 3: Due diligence (Weeks 2–4)
Financial, legal, and asset due diligence. Well-prepared borrowers with clean financials move through this stage quickly.
Step 4: Documentation (Weeks 3–5)
Documentation is negotiated directly between legal teams and can be completed in days for straightforward transactions.
Step 5: Funding (Weeks 4–6)
Once conditions precedent are satisfied, funds are drawn. For urgent transactions, some private credit lenders can move from first conversation to funding in under three weeks.
About GMG Capital Advisory
Donald Klip | Co-Founder, Global Mortgage Group | Head, GMG Capital Advisory
Donald Klip has 30 years of institutional finance experience spanning hedge fund management and senior roles at the world’s top global investment banks. GMG Capital Advisory specialises in arranging and structuring corporate debt financing of $10M–$100M for operating companies, asset owners, and project sponsors where conventional bank lending is unavailable, insufficient, or too slow. We operate across 23+ jurisdictions in Asia Pacific.
www.gmg.asia | [email protected] | +65 9773 0273 | Singapore · Hong Kong
The Debt Desk
Corporate private credit intelligence for Asia Pacific’s $10M–$100M middle market. Published by GMG Capital Advisory. Part of the Private Credit Asia content series.
www.gmg.asia | Read all 41 articles in the series
