AIA Thailand eyes private credit expansion amid market constraints
AIA’s operation in Thailand is actively pursuing private credit opportunities despite current regulatory limitations, according to Pardung Songatigamas, Head of Fixed Income and Asset Allocation at the country's largest life insurer by assets.
"We're in extensive discussions with our regulators about insurance company participation in private credit markets," Songatigamas said at AsianInvestor's 14th Southeast Asia Investment Forum in Bangkok earlier this month.
The push comes as traditional public markets face increasing constraints and institutional investors begin to gravitate toward the private credit space.
"Currently, private credit in Thailand remains somewhat taboo, with regulators viewing it similarly to traditional loans. What we need are appropriate semi-liquid fund structures that could complement our public credit positions," he explained.
ACTIVE VS PASSIVE
The life insurer's approach to private credit assets is part of a broader investment strategy that recognises the changing dynamics between active and passive management.
AIA Thailand
"We start by defining our long-term investment objectives and then determine which activities to manage internally versus delegating to external managers," Songatigamas said. As both a portfolio manager and asset allocator, AIA Thailand employs both bottom-up and top-down methodologies.
"[Regarding] our portfolio nature, we believe in bottom-up analysis, while asset allocation requires a more top-down approach. We begin with simple selection criteria for long-term investment monitoring and take necessary actions based on our objectives," he said.
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Technological progress is playing a dual role in this evolution, said Songatigamas.
"While technology has made passive investing more attractive, it has simultaneously introduced new market volatilities. This creates opportunities for active managers, leading us to maintain a balanced approach between both strategies," he said.
The scale and complexity of modern portfolio management has also influenced their strategy towards external partnerships.
"Given the difficulty of executing multiple active strategies internally, we incorporate global asset managers to help us on this journey. We carefully define which activities we want to manage ourselves and which require external expertise," Songatigamas said.
SUSTAINABILITY CHALLENGES
AIA Thailand's market expansion plans are complicated by the growing imperative for sustainable investment options, particularly given the limitations of its local market.
"We recognise the urgency of sustainable investing, especially when you look at environmental challenges facing our region today," said Songatigamas. However, implementation remains challenging in the Thai market.
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"Current opportunities tend to be piecemeal, making validation particularly difficult when dealing with SMEs. We're actively seeking government-supported initiatives that could provide more structured opportunities for sustainable investment at scale," he said.
Looking ahead, Songatigamas identified social inequality as an emerging risk factor that could reshape investment landscapes.
"Income and wealth disparities present significant challenges that many investors might be underestimating. These factors will have profound implications for both policy implementation and market segmentation in the coming years,” he said.