Macro-economic indicators are signaling a shift in economic activity away from the US and Europe, as markets across Latin America, Africa, the Middle East and Asia are growing at a rapid pace and are expected to be the main contributors to global growth and development in the years to come.
Demographics, urbanization and a rising middle class are leading to significantly higher growth outside of the US and Europe. This in turn is creating attractive dynamics among mid-market companies in growth markets, in addition to driving domestic consumption and increasing demand for transportation infrastructure, real estate, energy and other core services.
We believe that there is a significant investment opportunity to provide growth capital in the form of direct lending to mid-sized companies across various sectors in growth markets. Mid-market companies represent, in our view, the true engine of growth in these markets.
For such high growth businesses, bespoke and flexible private credit solutions are in high demand and can represent attractive funding sources, when compared to pure equity. We believe that the fundamental credit risk in growth markets is often misunderstood and mispriced. By leveraging our local networks and presence on the ground, we aim to de-risk credit investing in our target markets while generating attractive risk adjusted returns for investors.
Abraaj has established a dedicated credit investment team, and will leverage its strong local network of relationships to source investment opportunities.
Our strategy is to build a portfolio of private credit investments, diversified across sector and geography across our target markets. We will seek to invest primarily in mezzanine debt, but may also invest in senior debt if the situation is favorable to our strategy. In addition, we will focus on growth credit which may involve financing capital expenditure, acquisition financing, project financing and other situations that require bespoke, structured credit solutions.
We concentrate on targeting a historically underserved yet attractive market segment where credit is provided in close partnership with shareholders and senior management of growth market companies. The majority of opportunities will be sourced through our proprietary channels in geographies where Abraaj has a deep local history and unparalleled connectivity. In our view, this local presence provides us with a strong competitive advantage in terms of identifying the most attractive credit investment opportunities, managing a truly global growth markets direct lending strategy, and allowing us to achieve a well-diversified credit portfolio while maintaining intimate market knowledge and on the ground oversight of borrowers.