EvolutionX Debt Capital Pte., a joint venture between Temasek Holdings Pte. and DBS Bank, is refocusing its investment strategy from China to India. This shift aims to capitalize on the rapidly expanding private credit market in South Asia. The Singapore-based debt financing platform plans to allocate up to 70% of its $500 million private credit fund to India, as stated by partner Rahul Shah. The firm is targeting high double-digit returns over an investment horizon of three to four years.
The reallocation of funds is driven by macroeconomic concerns in China, prompting EvolutionX to increase its investment in India. Despite global warnings about risks in the direct lending market, private credit is gaining traction in India. The country’s robust economic growth is drawing investors, in contrast to China’s struggling economy.
Launched in 2021, the EvolutionX fund was initially designed to invest in tech and tech-enabled companies in India, China, and Southeast Asia. Originally, the plan was to allocate 40% of the fund’s assets to India and an equal proportion to China. So far, the fund has invested around $300 million across seven companies, many of which are based in India.
As the first fund approaches its investment limit, EvolutionX is preparing to launch a second fund. The company is also exploring new funding strategies, including tax-related payouts, employee stock option buybacks, and mergers and acquisitions. These new approaches aim to further diversify and strengthen their investment portfolio.