Asian Private Banker: “Agile” private credit manager hopes to win race for Asian wealth

By Claire Leung, Asian Private Banker
12 July 2023

“We run very lean, and we need to be very agile because that’s where we win. I think that’s where we win investors that will swear we win deals because we can, we can move quite fast. If we move at the speed of big firms, then we don’t have an edge. I think that’s the difference,” Francis Ng, managing director and chief investment officer of PACM, told Asian Private Banker.

Ng has worked in private credit for almost 10 years. He started his career at UBS, where he focused on fixed income. His team now has a total of 15 people and the firm’s clients include high-net-worth families in Canada, Hong Kong and Taiwan.

“Being an investment manager, we are managing our friends’ and family’s money directly,” said Ng. “Our investors are already very savvy with real estate, but we are providing an additional channel for them to get that yield that they want in the interim until the market recovers more on the equity side.”

“These [clients] traditionally know the real estate asset class quite well themselves. That is usually on a buy-and-hold. But right now, I think they are switching more towards three to five years,” he noted.

PACM focuses on common law jurisdictions such as Hong Kong, Singapore, Australia, Canada and the US because of operational efficiency. “For me, to do an enforcement in Hong Kong to seize the assets, [is] relatively the same as Canada and relatively the same as Australia. So I can be in Hong Kong, but I
can enforce a Canada asset relatively quickly,” he said.

In addition to its Hong Kong main office, PACM has offices in Vancouver and is opening up more in Toronto, London and Singapore.

Real estate private credit

According to Ng, real estate private credit has the advantages of a stable cash flow, controllable investment risk, diversified capital and a flexible trading structure.

Given the change in the economy and the crisis in China’s real estate market, a lot of people moving from mark-tomarket products to non-mark-to-market products, Ng commented. He anticipates that private banks are more marketing stable fixed incomes.

“One is it gives investors a lower volatility product,” he said, explaining what he believes is attractive about real estate private credit. “The second one for banks is that they don’t need to mark the market every day. Eventually, I think private credit has an interest for private banks, is that the NAV (net asset value) is usually relatively slow in terms of marketing. So it benefits both sides in terms of marketing, as a low volatility, non-correlated market asset class.”

Investors need to look at two things when they select this asset class, Ng suggested. “The first thing is they need to look at what they are invested in. Second is, how long has the manager been in operations in this specific asset class?” he added.

PACM No.2 Fund

In June, PACM launched PACM No.2 Fund, which will see its first closing in late July. To date, the fund has raised more than US$100 million and is expected to increase to US$150-200 million by the end of July, according to information provided by the asset manager. The investment period is three years.

Closing at the end of the year, the fund target is US$300 million. “The rate of return, we aim for about 12 to 15%, p.a.,” Ng said. “These are from organic, underlying loan performance.”

“I think that’s one of our advantages of being able to source these deals in the market globally, to help generate that 12 to 15%,” he added.

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Asian Private Banker: “Agile” private credit manager hopes to win race for Asian wealth