Bain targets $750m for Asia special situations fund

The fund has a hard cap of $1 billion, according to a source familiar with the situation. The firm’s credit unit – known until last year as Sankaty Advisors – is already meeting potential investors to discuss the vehicle.

Bain has been active in credit in Asia for several years through its global funds, but the creation of a dedicated vehicle for the region underlines the growing appeal of the market. While credit-based solutions are well-established in more developed jurisdictions, international investors are increasingly looking at the likes of India, China and Southeast Asia in the expectation that a somewhat niche PE opportunity will become more mainstream.

In India alone, a string of private equity investors want to capitalize on the pressure being placed on banks to rid themselves of distressed assets and promises of more regulatory support for creditors. Bain announced a partnership with Piramal Enterprises last August; they believe there could be over $1 billion in investment opportunities for distressed assets in the next few years. 

There is also renewed interest in Chinese non-performing loans (NPLs) as banks come to terms with bad decisions made eight years ago when the government initiated a credit boom to counter the impact of the global financial crisis. Local asset management corporations buy discounted portfolios from banks, but the volume of bad loans is so large that more is expected to be sold on to third parties.

ShoreVest Capital Partners claims that NPLs in China’s financial system amount to $3 trillion, at least six times larger than the previous cycle when estimates were around $500 billion. The firm, set up by former executives from Shoreline Capital – which remains active in the market – is currently bidding on deals that would be financed using capital sourced from a large global asset manager.

Bain’s significant break in Asia came with the acquisition of J.P. Morgan's Global Special Opportunities Group in 2014 at a valuation of $1.3 billion. This included a portfolio of loans and special situations investments in Australia and across Asia. Before that, the firm paid more than $300 million for a portfolio of performing and stressed corporate loans from Lloyds in Australia.

It followed up in 2015 with the purchase of GE Capital’s commercial lending and leasing portfolios in Australia and New Zealand. The portfolio has in excess of A$2 billion ($1.5 billion) of exposure across debtor finance, corporation aviation finance, leveraged finance, equipment finance and asset-backed lending.

Bain Capital Credit had approximately $30.4 billion in assets under management globally as of March 2016. It invests across the full spectrum of credit strategies, including leveraged loans, high-yield bonds, distressed debt, private lending, structured products, NPLs and equities.

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• Topics
• Fundraising
• Credit/Special Situations
• Australasia
• Greater China
• South Asia
• Bain Capital Asia
• Structured finance
• Distress
• China
• India
• Australia