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  • Dorian Chin

Wealth of Polynesia: unexplored potential thanks to private credit funds

The unknown depths of Polynesia

Mention Polynesia and the mind drifts to pristine beaches, turquoise waters and sunny tranquility. Yet beyond these captivating panoramas, Polynesia is also home to a burgeoning economic narrative, which is subtly revealed, driven by sectors such as tourism, local entrepreneurship and sustainable development.

Understanding private credit

Private credit refers to loans or debt provided to businesses by non-bank institutions. These may include businesses that might find traditional banking channels restrictive or not suited to their particular needs. Private credit providers offer tailored lending solutions, which may include direct business lending, distressed debt, and other specialized lending strategies. Essentially, private credit offers an alternative but vital route to businesses seeking capital, allowing flexibility and customization.

Demystifying private credit funds

To many, private credit funds may seem esoteric. However, these are simply capital reserves specifically reserved for lending to businesses outside the sphere of traditional banking channels. It’s a modern, more personalized approach to lending, a tailored bridge connecting those who need capital to those who are ready to provide it.

An overview of the global private credit market

The global private credit market has grown in recent years and now manages approximately $1.5 trillion. Although generally more expensive than publicly syndicated debt, private lenders provide greater certainty in transaction execution and higher degrees of confidentiality – a feature often sought by companies seeking quiet expansions or pivots.

North America records positive growth in fundraising in 2022 as shown in this graph by Mckinsey & company

Several leading investment firms, traditionally associated with private equity, have also made a significant footprint in the private credit space such as Blackstone, KKR and the Carlyle Group.

These institutions, with their global reach and diverse strategies, illustrate the transformative potential and trust associated with private credit.

Why consider private financing rather than traditional channels?

Given the changing financial landscape, businesses may find private financing more attractive than traditional bank loans or other financing methods. The financial world has become more complex and restrictive due to increasing regulations. Although these regulations aim to stabilize the financial system, they often lead banks to be more cautious. As a result, they are sometimes hesitant to finance projects that they consider risky or unconventional.

Private financing, on the other hand, offers flexibility. At Polynesia Wealth, for example, we can tailor financing solutions for unique needs, without the bureaucratic red tape that banks are often involved in. Additionally, private financing often fosters a closer relationship between investor and borrower, leading to greater collaboration. and adaptive financial arrangements.

Banks remain major players in the field of financing. Yet tighter regulations, capital requirements and risk aversion have made them more circumspect. For certain types of projects, particularly those in niche sectors or with unconventional models, obtaining bank financing can be an obstacle. Private credit funds therefore present a complementary path.

Public or private companies: a quality perspective

Public and private companies have inherent differences. Public companies, given their transparency mandates, often face increased scrutiny from various stakeholders, which can lead to a more short-term view. Private companies, sheltered from the rush for quarterly results, can make decisions that are beneficial in the long term, even if they prove painful in the short term. Their agility allows them to quickly adapt to changing market dynamics, often reducing costs more aggressively and adding value from an operational perspective. Whether public or private, the quality of a company is defined by its leadership, vision and execution.

The attraction of Polynesia

Polynesia lies at the intersection of natural appeal and economic aspirations. The region's growth, particularly in tourism and local businesses, is generating demand for capital. Capital that can be channeled through private credit funds. As an investor, you not only have the potential for financial gain, but also an opportunity to participate in the organic and sustainable growth of the region.

Investing beyond the familiar

Polynesia, with its blend of untouched beauty and economic promise, offers a unique investment horizon via private credit funds. For those with the vision to look beyond the familiar, this presents an opportunity to explore, engage, and envision a promising future.

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