LP interest in secondaries, distressed debt to grow, says Indosuez’s Brenda Lau

Brenda Lau, Head of Asset Management Asia, Indosuez Wealth Management

Limited partners (LPs) could shift their focus to secondary and distressed debt investments in the coming two years, as the coronavirus pandemic has created opportunities in these areas.

The market is in “an early stage of prolonged distress, which is a debt-buying period for heavily-hit industries like travel, hospitality, energy, and also for some moderately-hit ones like servicing and manufacturing,” said Brenda Lau, head of Asset Management Asia at Indosuez Wealth Management, in an interview with DealStreetAsia.

The Asia-focused executive at Indosuez, the global wealth management brand of France-based cooperative financial institution Crédit Agricole Group, is more upbeat on the deal-making prospect in the secondary market.

“We thought opportunities in secondaries would come quicker,” said Lau, drawing on a historical analogy of the 2008 financial crisis when institutional investors were forced to sell their private equity portfolios in the secondary market due to ‘the denominator effect’ — giving away lucrative assets to investors who had managed to continue investing.

According to a survey published by global advisory firm Probitas Partners in May 2020, secondary investments and distressed debt opportunities are the only two alternative asset classes in which interest grew compared to 2019. These opportunities will potentially persist in 2021 as well, said Lau. “It’s just a matter of whether you can scoop [up deals] during this period at a low and attractive price.”

Indosuez Wealth Management has 3,150 employees across 14 countries in regions including Europe, Asia-Pacific, the Middle East, and the Americas. The firm had 130 billion euro ($154 billion) in assets under management (AUM) as of June 30, 2019, according to its website.

Edited excerpts of the interview with Lau:

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.