Asia Special Situations
All - any insight into Asia based special sits funds (Tor, ADM, Varde, Arkkan, OCP, PAG) and US HFs (DK, King St, Avenue, Farallon) - activity, mandate & performance
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Yep anything on Asia names I’ve listed below?
Based on the most helpful WSO content, here's a breakdown of Asia-based special situations funds and their activities:
Tor, Arkkan, BFAM: These funds are active in direct lending and special situations. They are willing to participate in secured, mezzanine, or DIP loans if the situation is compelling. However, their fund structures often lean towards more liquid strategies like bond purchases.
Ares SSG: This fund is still driven by the old SSG team in Asia. It has a strong presence in financials in ANZ but shows limited focus on distressed or cyclical opportunities in the region.
Bain: Bain's activity is diversified across financials, growth/equity, and distressed investments. They recently raised an Asia special situations fund, indicating a continued focus on the region.
Oaktree: Oaktree is highly active in loan-to-own strategies in ANZ, with a focus on cyclicals like mining. They recently raised $2 billion for their Asia Special Situations Fund VI, showcasing their commitment to the region.
Macquarie PF: This fund focuses on growth and structured equity, with smaller ticket sizes. There has been a noticeable shift towards more traditional direct lending.
BX TacOpps (Blackstone Tactical Opportunities): Their activity in ANZ is limited, focusing on growth, structured equity, and financials equity.
Brookfield: Their activity in the special situations space in ANZ is minimal.
KKR: KKR is primarily focused on direct lending and asset finance in Asia, with limited special situations activity in ANZ. Their Asia credit business operates across regional offices, with teams in Mumbai and Sydney handling direct lending and special situations.
US Hedge Funds (DK, King Street, Avenue): These funds are not traditional direct lending players but are willing to engage in secured, mezzanine, or DIP loans if the opportunity is attractive enough.
For performance and mandates, funds like Oaktree and Bain have shown strong activity and fundraising success, while others like Brookfield and BX TacOpps have limited engagement in the region.
Sources: Best direct lending shops in Asia, Special Situations Investing (BX, Apollo, Ares), Non US/Europe IB/PE Overview, Current Thoughts on Opportunistic/Special Sits Groups (Oaktree Special Sits, BX TacOpps, Apollo Hybrid Value Fund, Brookfield Special Investments, KKR Special Sits), Living in Asia
Just one thing to note that is the opportunistic mandate in Asia is very different from the typical distressed/control investing you see in the US due to the lack of a robust bankruptcy code. The standard playbook of a distressed fund (via fulcrum, utilizing DIP financing, automatic stay etc) is just non-existent, meaning - a lot of special sits in Asia is an extension of growth equity investing in the US (pref / minority stake). Also lack of supportive regulations for a bigger private credit market adds to this (since lending is a lot more state oriented, you do not witness the same level of vacuum of lenders in the middle market space you see in the US and limited amount of LBOs also indicate lack of sponsor backed deals).
Still a quickly growing market and fun deals but its a very different landscape.
Depends on the country, in ANZ - senior lenders have good protections in bankruptcy.
Capital structure not as complex usually just US TLB, unitranche or bank debt. Multiple instances where funds buy secondary debt and do loan to own (Accolade, GenesisCare etc)
Agreed. But one thing to note is ANZ mkt is underpinned by a very resilient economy (almost no recent recession aside from the short Covid shock). Such macro environment leads to very few distressed opportunities that are idiosyncratic (e.g. Accolade and GenesisCare like u mentioned) and only occasionally macro induced one like Virgin Airline (Covid). Very few Special Sits managers are dedicated to distressed investing in this part of the world.
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