Sovereign wealth funds are increasingly backing private credit strategies in emerging markets, as investors look to diversify portfolios that have become heavily concentrated in the US, according to Bloomberg.

Industry figures cited by the publication show that emerging markets have accounted for just 4% of global private credit fundraising since 2008, despite a $1.7tn global market dominated by US private equity-backed lending. However, 2025 marked a record year for emerging-market private credit activity, with momentum expected to continue.

Managers such as Gemcorp Capital Management and Ninety One are planning to raise billions for new strategies in 2026, citing growing interest from sovereign wealth funds, pension schemes, and insurers. Abu Dhabi’s Mubadala and Saudi Arabia’s Public Investment Fund have already completed several private credit deals, often alongside global managers including Apollo.

Africa and Asia are attracting particular attention. Gemcorp aims to deploy at least $1bn into Africa this year, while Asia is seen as a regulatory fit for insurance-backed capital. In Latin America, private credit remains nascent, with fundraising of $1.3bn through the third quarter of 2025, down from $3.6bn in 2024, but still well above levels seen a decade ago.

Investors acknowledge higher risks, including legal complexity and weaker creditor protections. Nevertheless, the search for diversification and higher risk-adjusted returns is pushing sovereign capital further into emerging-market private credit.

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