Kilde’s Fountain of Finance #17 - 07 October

Kilde News

• AUM update: We're excited to share that our AUM is rapidly approaching the 70M+ USD mark, and we're confidently on track to surpass 100M+ USD by the year's end, showcasing our steady growth trajectory.?
• Deal Recap: In September, we swiftly launched private debt deals with our partners ID Finance (Spain), Evergreen Finance (UK), and Fluid (Singapore) for our growing community of accredited investors. If you’re part of the Kilde community, don't miss out on these deals, as they're often fully subscribed within 1-2 business days.
• New Deals: We’re launching tranches from new partners, such as Monedo Financial Services (an India-based Fintech) and Bichil Global ( Mongolia) on 15 October. Keep an eye out for an additional tranche with Fluid in later Q4. Plus, a Europe-based business is set to launch a new tranche in mid-November, so stay tuned for these exciting updates.
• Interview with Fluid: Our Head of Marketing, Nay Y. Aung , sat down with Ruoyun Yang, CFA , the CFO and Co-Founder of Fluid, Singapore’s rising challenger in the B2B BNPL space. Head on here to learn more about what Ruoyun had to say about Fluid and its ambitions: B2B Financing in Singapore - Interview with Ruoyun Yang, CFO and Co-Founder of Fluid
• Are you new to private credit investing? Discover what Kilde is up to in this YouTube playlist with our CEO and Co-Founder, Radek Jezbera . The playlist is exhaustive, but it covers almost everything you need to know about Kilde and Private Credit Investing:https://www.youtube.com/playlist?list=PLrYfjXQ0ouyOY4HLtPqzOyPyPuDSiRO4u.
• Conferences: Our Co-Founder, Oleg Kryukovskiy , attended the Central Asian Microfinance Summit in Samarkand to discuss Impact Investments and Their Role in the Development of Microfinance in Central Asia. Radek Jezbera and TAY Han Jie met Family Offices and Institutional Investors in Hong Kong at the Hubbis Conference. Thanks to Michael Stanhope and Hubbis Team Linh Nguyen and Michelle Stanhope !
• Fresh New Look: Our site has a new makeover. Don’t forget to sign up to check out the new look at kilde.sg!

Industry Intel: Our Favorite Industry Report Roundups

Bond Renaissance 2024: Navigating the Shifting Tides of Fixed Income

Franklin Templeton’s latest Fixed Income Navigator report reveals a brighter bond market outlook for Q1 2024, driven by attractive yields, supportive liquidity, and declining inflation.

Key takeaways:

• High conviction in bonds with yields in a favourable zone.
• Falling inflation may restore bonds' diversification benefits.
• Monitor risks like aggressive rate cut pricing and higher bond supply.

While challenges remain, the balance of risks and opportunities paints a positive picture for bond investors with a medium-term horizon.

The Fed is likely to lower rates in 2024, which historically has been a major catalyst for bond performance. Getting the timing of Fed cuts right is more crucial for investors than predicting the start of a recession.

As we navigate these shifting tides, staying informed and agile will be vital to seizing the opportunities in this bond renaissance.

Link to report: https://www.franklintempleton.lu/articles/2024/fixed-income/bond-renaissance-2024-keeping-an-eye-on-the-price

What Could Happen if the Chinese Property Market Collapsed?

A compelling new report by Moody's Analytics delves into the potential consequences of a severe real estate crisis in China, exploring its potential to disrupt the global economy.

A severe real estate crisis in China could send shockwaves through the global economy:

• In a "Meltdown" scenario, a sudden crash in confidence could trigger defaults, causing a liquidity crunch in shadow banking. House prices could plummet by 15% or more by 2026.
• Financial turmoil would spread to stock markets and lending, with capital fleeing the country and the yuan facing pressure.
• Real estate investment could plunge by 22% by 2025, dragging down overall spending. The construction and manufacturing sectors would be hit hardest.
• Millions could lose jobs as the crisis spreads beyond real estate. Consumer confidence and spending would collapse, with saving rates soaring to 40%.
• Government stimulus would likely prove inadequate given falling revenues and money-losing state firms may require bailouts.
• Globally, the damage would be concentrated in Asia and Latin America, but no region would be spared. Commodity exporters would suffer as China's demand falls.

The report also models a less severe "Rocky Landing" scenario, but either way, the potential fallout from a bursting of China's property bubble is deeply concerning. Link to report: https://events.moodys.com/mc-31950-wbn-2024-map23110-chinas-property-market

Latest scoop on Private Credit Investing

Private Credit and Mini-Millionaires: Navigating a Tricky Investment Landscape

Private equity firms are increasingly targeting "mini-millionaires" (those with $1M to $5M in investable assets), but these investors' need for liquidity presents a challenge due to the long lock-up periods typically associated with private credit and equity investments.

Challenges: Unlike institutional investors, mini-millionaires hesitate to invest their capital for extended periods. They often prefer investments with easier access to funds, especially for emergencies like medical bills or other unforeseen expenses.

Solutions: Firms like Blackstone, Apollo, and Ares are addressing this with semi-liquid funds that offer some flexibility for redemptions. However, these still come with restrictions designed to prevent mass withdrawals, balancing the need for liquidity with the potential for long-term returns.

Regulatory Hurdles: Engaging this investor segment also brings increased regulatory scrutiny. Firms must carefully navigate complex rules around fund marketing and investor relations.

Despite these challenges, tapping into the growing wealth of mini-millionaires can be highly lucrative, provided firms offer a suitable mix of flexibility and attractive returns.

At Kilde, we've observed similar trends. High-net-worth individuals (HNWIs) often prioritise liquidity, which can be achieved through shorter-duration assets like short-term consumer loans or trade finance receivables. Another approach involves working with "market makers" who offer early redemption at a discount.

Reference: https://www.bloomberg.com/opinion/articles/2024-05-28/private-credit-and-mini-millionaires-don-t-mix?sref=KJhMH2ka

Private Credit Secondaries: A Disruptive Force in the Market

Private credit secondaries have emerged as a game-changer in the booming private credit market. This strategy involves purchasing stakes in private credit funds at a significant discount, offering a compelling return premium compared to traditional investment routes.

But that's not all! Private credit secondaries also offer:

• Diversification across issuers, sectors, and geographies
• Transparency into the underlying investments
• Faster capital deployment and distributions

For example, unitranche direct lending funds typically target gross IRRs of 10-12%, while private credit secondary (PCS) funds aim for 12-14%.

As market volatility pushes LPs to seek liquidity and GPs to raise funds, the supply-demand imbalance has led to record-level discounts on Net Asset Value (NAV), often around 20%.

Private Credit Secondary Funds are generally close-ended funds with limited or no early redemption options, making them ideal for patient capital.

Reference: https://www.campdenfb.com/article/isio-private-capital-first-the-worst-secondaries-the-best

About Kilde’s Fountain of Finance

Our editorial team at Kilde curates valuable insights into the private credit space to keep you updated on exciting developments. Subscribe now for free and stay informed!

About Kilde

Kilde is an investment platform tailored for individuals and institutions, providing access to private credit deals supported by cash-generating assets. We offer up to 13.5% annual returns to our investors, surpassing similar risk investments yielding around 8%. We are licensed by the Monetary Authority of Singapore. Find out more:https://www.kilde.sg/