AMP has announced the launch of its Alternative Debt Fund, which can be accessed by AMP Super Fund members.

AMP is committing seed funding of A$300 million to the fund. Two external managers have been appointed.

The fund will invest in credit risk notes issued by banks insuring the first loss on a loan pool, and credit solutions including distressed credit and special situations.

Last month, Pengana Investment Management launched the Pengana Global Private Credit Trust, a listed fund, targeting a $100 million raising with a pitch that it will generate yield of 7 per cent a year.

Like AMP, Pengana will place the funds with underlying managers that invest in private credit assets. Investments will principally be in Europe and North America but Australian exposure could be as high as 55 per cent. 

Investment strategies will include direct lending, structured credit and specialty finance, and the majority of assets will be senior debt.

Both funds will source assets in the global market because the asset pool is large. AMP estimates the value of the global private debt market to be US$1.7 trillion and the Australian market to be worth around A$200 billion.

EY’s annual Australian private debt market update, released earlier this year, estimated the size of the market at $188 billion, spread across leveraged and sponsor lending, direct lending, middle market and SME, real estate, infrastructure, special situations, distressed and venture debt.

EY estimated that $76 billion of that is in commercial real estate-related loans, representing about 16 per cent of total lending to that segment, and $112 billion is in all other business-related segments, representing about 12 per cent of total corporate and business lending.

Growth of 7 per cent in assets in 2023 was down from 32 per cent in the previous year.