AlbaCore Capital, a London-based private credit firm bought by Mitsubishi UFJ Financial Group, sees growth potential in Japan for alternative investments which are still underweight in Japanese institutional investors’ portfolios.
“Japan has historically had a very small allocation to alternatives,” AlbaCore’s Chief Investment Officer David Allen said, referring to nontraditional assets such as private debt, private equity and real estate. “There probably could be continued growth in this market.”
Mitsubishi UFJ, Japan’s largest banking group, bought 75% of AlbaCore last month through its Australian investment management unit First Sentier Investors to diversify the range of investment capabilities.
AlbaCore, with $9.4 billion in assets under management, has strengths in private credit, collateralized loan obligations and structured credit in Europe.
Private credit, provided by a lender other than a bank, has flourished since the 2008 financial crisis that forced capital-constrained banks to cut lending.
Allen said AlbaCore has now been expanding its business for first lien senior secured debt, with the highest-ranking security in a company’s capital structure, as high interest rates allow lenders to make high returns even on such debt with more protection.
Junichiro Taguchi, an executive at Mitsubishi UFJ’s asset management business division, said in the same interview that senior debt products, which carry lower risks with higher priority for repayment, would be more easily accepted by Japanese investors.
Japan’s large pool of institutional investors, including some of the world’s biggest pension funds, has been attracting global private debt companies. Tikehau Capital and Hayfin Capital Management are among those that announced expansion plans in Japan in recent months.