Over the last decade, the Alternative Private Debt asset class has been one of the fastest growing within the investment fund industry. This can be explained by the greater restrictions adopted by traditional financial institutions after the 2008 financial crisis, which created an opportunity for fund managers to enter the market and bridge the gap between supply and demand for access to financing by private companies.

It is important to understand that the objective of private debt funds is to invest in instruments or financing contracts for private companies. The main underlying assets in which these funds invest include mortgage loans, SGR loans, invoices, direct loans, preferred capital, promissory notes, and leases, among others. It should be noted that this type of investment has a medium- to long-term strategy, obtaining liquidity premiums in its rates.

After years of being one of the asset types with the highest annual growth, private debt had three difficult quarters, in which the uncertainty caused by both the crisis in October 2019 and the pandemic led to a decline at the end of September 2020 compared to the assets under management at the beginning of the year.

However, the scenario of low rates for investment alternatives both nationally and globally, along with greater mobility and improved expectations in the last quarter of the year, led to a recovery in investor appetite for allocating more capital to private debt assets, which generate an adequate risk/return ratio, providing better diversification and higher spreads compared to market alternatives.

According to ACAFI data, at the end of 2020 there were 107 Public Private Debt Funds with assets under management of US$4.611 billion. Since 2015, assets under management in millions of dollars in Private Debt in Chile have increased by 682% and, compared to the end of 2019, grew by 23%, making it the third alternative asset with the highest allocation in the industry, behind Real Estate Assets and Private Equity.

Currently, at FYNSA AGF we manage four private debt funds with approximately US$60 million in assets. We offer returns ranging from 4% to 10%, investing primarily in mortgage-backed securities, preferred capital, and promissory notes.