Abu Dhabi's Chimera and Alpha Wave roll out $2bn private credit fund

Alpha Wave Private Credit fund focuses on the US, UK, EU, Canada and Australia

Alpha Wave Private Credit will target attractive private credit opportunities globally. Shutterstock

Chimera Capital, an Abu Dhabi asset management company and subsidiary of Chimera Investments, and investment company Alpha Wave Global have launched an open-ended credit fund with initial commitments of $2 billion that will target private credit market opportunities globally.

The Alpha Wave Private Credit fund will be jointly managed by Chimera Capital and Alpha Wave Global and seek to identify where there is a shortage of capital and invest in private loans, as well as other credit instruments, the companies said in a statement on Monday.

The fund aims to develop “a diversified portfolio of credit investments reflecting attractive risk-reward characteristics irrespective of the path of interest rates and in the context of growth in the private market for credit solutions”, the statement said.

The fund has a global mandate, focusing on the US, Canada, UK, EU and Australia.

The private credit industry, or non-bank lending, is estimated to be worth about $1.3 trillion. Private credit accounts for about 17 per cent of total credit today and has increased by 14 per cent each year since 2000, around twice the rate of public credit, according to Bank of America Merrill Lynch.

In the first six months of this year, 66 private debt funds raised a total of $82bn — compared with roughly $93bn collected across 130 vehicles in the same period a year ago, according to PitchBook's H1 2022 Global Private Debt Report.

Last month, Mubadala Investment Company, Abu Dhabi's sovereign wealth fund that manages more than $284bn in assets globally, and private equity firm KKR forged an alliance in which both companies will co-invest across performing private credit opportunities in the Asia-Pacific region to address a shortage of capital and support the long-term growth plans of businesses.

As part of the “strategic partnership”, Mubadala and KKR will invest at least $1bn of long-term capital, providing credit solutions to companies and sponsors, both entities said on Monday.

Private credit appeals to borrowers because of tailored and structured solutions, longer maturities and greater flexibility, according to the World Bank's International Finance Corporation.

“Private credit is an important segment of financial markets, that has played a strong role in providing access to financing for underserved segments. With significant amounts of ‘dry powder’ (capital raised but not yet invested), private credit has a potentially important role to play in the post-pandemic recovery as a long-term partner for growth,” the IFC said in a report last year.

Rick Gerson, chairman of Alpha Wave Global, said “there is a clear need and large opportunity across cycles for private credit for both investors who desire yield in a low-risk structure and for companies seeking credit solutions. We see this as an important, enduring and growing area”.

The Alpha Wave Private Credit fund aims to “generate current income for investors, through originating or participating in private, senior secured, floating rate loans for companies looking for credit solutions”.

“This fund will enable us to seek to provide investors with differentiated investment opportunities that combine running yield and downside protection, along with upside potential,” said Seif Fikry, chief executive of Chimera Capital.

“By broadening the product offering through this and other planned launches, we hope to position ourselves at the forefront of the evolving regional asset management industry.”

Chimera Capital is regulated by the Abu Dhabi Global Market and is a wholly-owned subsidiary of Chimera Investment, an Abu Dhabi-based private investment company managing a diversified international portfolio of listed and private equities. It focuses on the alternative asset management space.

Set up in 2007, Chimera is part of Abu Dhabi’s Royal Group, which is active in a number of sectors including property, construction, food and beverages, hospitality, aviation and health care. The group has more than 60 companies under its umbrella and employs 120,000 people.