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<p>Growing concerns about corporate and personal debt in two of Asia&#8217;s largest economies, India and China, have raised the prospect that assets in these markets will become likely targets for distressed funds.</p></article>

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<p>Growing concerns about corporate and personal debt in two of Asia&#8217;s largest economies, India and China, have raised the prospect that assets in these markets will become likely targets for distressed funds.</p>
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<p>This has led to a surge in interest for distressed funds with six Asia-focused distressed debt funds currently in the market, targeting an aggregate $4.8 billion, said a recent <strong><a href="https://www.preqin.com/docs/press/Asia-DD-Nov-17.pdf" target="_blank" rel="noopener">Preqin report</a></strong>.</p>
<p>The report shows that aggregate capital targeted by these vehicles accounts for 62 per cent of Asia-focused distressed debt fundraising over the last ten years. Since 2016, fund managers have accumulated $1 billion in dry powder for Asia-focused distressed debt funds, which is the highest amount of undeployed capital seen since 2007. This comes after two years of increasing levels of dry powder, said the Preqin report.</p>
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<p>Over the years, a majority of distressed debt fundraising has been centred around North America- and Europe-focused funds. Since 2007, North America-focused distressed debt has outpaced all other regions with 166 funds raising over $236 billion in capital, followed by $48 billion secured by 53 funds focused on Europe. On the other hand, Asia-focused funds have raised roughly $7.7 billion since 2007, with 2015-2016 recording the most activity.</p>
<p>Stressed assets sale in India have risen as the Insolvency and Bankruptcy Code has opened up more opportunities for buyers.</p>
<p>&#8220;With the institution of the Insolvency and Bankruptcy Code by the Indian Government in 2016, the bankruptcy process has been expedited, and it is expected that it will be more efficient for fund managers to acquire distressed assets,&#8221; said Ryan Flanders, Head of Private Debt Products, Preqin.</p>
<p>&#8220;Concurrently, in China, years of economic growth have led to high levels of corporate debt and, as the rate of growth has slowed, the government has begun to ease the process for foreign firms to help reduce privately held debt. These events seem to have helped cause an industry boom for Asia-focused distressed debt,&#8221; he added.</p>
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<p><strong>India- and China-Focused Distressed Debt Funds Closed, 2007 &#8211; 2017 YTD (As at October 2017)</strong></p>
<p><img loading="lazy" decoding="async" class="alignnone size-full wp-image-85850" src="https://media.dealstreetasia.com/uploads/2017/11/india-china.png?resize=640,283" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/11/india-china.png?w=1087 1087w, https://media.dealstreetasia.com/uploads/2017/11/india-china.png?resize=300,133 300w, https://media.dealstreetasia.com/uploads/2017/11/india-china.png?resize=768,340 768w, https://media.dealstreetasia.com/uploads/2017/11/india-china.png?resize=1024,453 1024w" sizes="(max-width: 1087px) 100vw, 1087px" data-recalc-dims="1" /></p>
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<p>While there are some similarities between the North America energy crash and the uptick in distressed debt fundraising in Asia, it might still be early to draw an exact parallel.</p>
<p>&#8220;The six distressed vehicles in market, all of which have exposure to India or China, and their large aggregate targeted capital, indicate that fund managers see increased opportunities in the region. We may well see interest intensify further as the economic situation in the two countries develops,” said Flanders.</p>
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<p><strong>Asia-Focused Distressed Debt Dry Powder, 2006 &#8211; 2017</strong></p>
<p><img loading="lazy" decoding="async" class="alignnone size-full wp-image-85851" src="https://media.dealstreetasia.com/uploads/2017/11/dry-powder.png?resize=544,356" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/11/dry-powder.png?w=544 544w, https://media.dealstreetasia.com/uploads/2017/11/dry-powder.png?resize=300,196 300w" sizes="(max-width: 544px) 100vw, 544px" data-recalc-dims="1" /></p>
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<p>The largest India-focused fund closed in the last 10 years was raised by Apollo Global Management in partnership with International Finance Corporation (IFC) which contributed $500 million as part of a joint venture.</p>
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<p>The Preqin report showed, that as compared to India, fewer China-focused distressed debt funds reached a final close from 2007 to 2017 till date. Of the five funds targeting distressed assets in China, three were managed by Shoreline Capital, raising an aggregate $981 million in capital. Shoreline Capital is currently raising its third fund, Shoreline Capital CNY Fund, which will be its largest to date if its $1.5-billion target is reached.</p>
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<p><strong>Asia-Focused Distressed Debt Funds in Market (as at October 2017)</strong></p>
<p><img loading="lazy" decoding="async" class="alignnone size-full wp-image-85852" src="https://media.dealstreetasia.com/uploads/2017/11/fund.png?resize=518,378" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/11/fund.png?w=518 518w, https://media.dealstreetasia.com/uploads/2017/11/fund.png?resize=300,219 300w" sizes="(max-width: 518px) 100vw, 518px" data-recalc-dims="1" /></p>
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Growing concerns about debt in India and China, have raised the prospect that assets in these markets will become likely targets for distressed funds.

Asia-centric distressed debt funds gain momentum, pile up $1b since 2016

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Asia-centric distressed debt funds gain momentum, pile up $1b since 2016

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