Global investors are increasingly turning to Asia’s private markets to capture opportunities created by the artificial intelligence boom, as rising demand for computing, power and data infrastructure converges with broader shifts in supply chains, demographics and industrial capacity.
The region is increasingly being viewed as more than a diversification destination by global investors, with structural changes creating opportunities to finance growth and invest in businesses benefitting from it.
“Earlier, we would look at Asia as a diversification play, but increasingly you’re seeing it as a creation of value,” said Seema Shah, chief global strategist at Principal Asset Management, during a panel discussion at the Milken Institute Asia Summit.
Shah said Asia is sitting at the heart of the global AI capital expenditure cycle, with opportunities extending beyond chipmakers to the broader infrastructure needed to support computing demand, including data centres and cooling systems.
Apollo is seeing opportunities to finance that build-out. Eiji Ueda, partner and head of Asia Pacific at the private markets firm, said demand for data centres and computing capacity is growing rapidly, with chips, energy and power generation becoming increasingly important parts of the infrastructure.
“If we look at the data centres built these days, a lot of value is coming from chips, and also energy and power plants are a very important part of it,” Ueda said. He highlighted chip finance as a new financing opportunity and said Apollo is looking to be creative in supporting the capital needs associated with the AI build-out.
Apollo also has a long-term view that AI will drive productivity gains across businesses and significantly disrupt industries, Ueda added.
For investors such as Hostplus, that does not necessarily mean trying to identify which AI company will emerge as the winner.
David Elia, CEO of the Australian pension fund, said it focuses on long-term structural themes and does not try to time market cycles. AI and digital transformation are among those themes, alongside energy electrification, supply-chain diversification and demographic change.
“Our job is not to try and pick who’s going to win the AI race, but we know that there is a significant level of investment being made into that particular sector,” Elia said.
He described the opportunity using the “picks and shovels” analogy, pointing to data centres, semiconductors, energy and electrification as the infrastructure underpinning the AI investment cycle.
Hostplus is also moving beyond its traditional role as a capital allocator, partnering with investment managers such as Apollo to develop businesses and investment opportunities around those themes. “We’re no longer just an allocator of capital per se,” Elia said.
Seviora Holdings, Temasek’s asset-management platform, is finding another route into the structural shifts through private credit.
Gabriel Lim, CEO of Seviora, said the firm has been able to originate and structure private-credit investments more effectively in Southeast Asia as capital flows, corporate governance practices and legal frameworks evolve.
“We’ve been able to originate better through disruptions as capital flows are changing, as investments are changing,” Lim said.
While Seviora does not have direct exposure to much of the AI stack, many of the companies it lends to or invests in will be affected by the technology, he said. “How we think about the future business model, how we think about the returns we are underwriting and the operating model we are underwriting over the next five or seven years is something that we look at very carefully.”
Japan could provide another avenue for private capital. Ueda said the country’s ageing and declining population means productivity must rise to sustain economic growth, increasing the importance of AI adoption.
At the same time, Japan’s heavy reliance on banks could create room for private credit. About 80% of corporate financing has historically come through bank loans, compared with about 30% in the US, while slowing deposit growth could increase demand for alternative sources of corporate finance, Ueda said.
