Bain reaches $557m first close on Asia special situations fund
Bain Capital Credit has reached a first close of $557 million on its Asia-focused special situations fund.
According to a filing, 38 LPs have already committed to the vehicle, which launched earlier this year with a target of $750 million and a hard cap of $1 billion. The fund will pursue direct lending, mezzanine debt and distressed asset opportunities in Asia.
Bain is already active in Asia’s credit space through its global funds, but considers the region to offer enough investment opportunities to justify a dedicated vehicle. The GP believes Asia has been overlooked by other GPs due to the difficulty of building a team in the region and its perceived risk, leaving few operators for LPs to support. However, due to falling returns from credit investment in Western markets, the firm expects institutional investors’ interest to rise.
One of the most attractive thematic opportunities for Bain in Asia is the non-performing loan (NPL) space in China due to recent progress in establishing a professional judiciary to ensure enforceability of loan terms. Bain expects an increase in deal flow from the large pools of NPLs held by Chinese banks. In May, it bought a portfolio of loans worth around $200 million from Huarong Asset Management.
The GP is also drawn to Indian distressed assets, given ongoing efforts by the Reserve Bank of India and the Modi government to relieve burdens on the country’s banks. Bain formed a joint venture with Indian conglomerate Piramal Enterprises last year for direct investments in distressed businesses, along with acquisition of their debt, for the purpose of restructuring. The partners have said that there could be over $1 billion in investment opportunities for distressed assets over the next few years.
Bain Capital Credit, known until last year as Sankaty Advisors, made its significant break in Asia in 2014 with the acquisition of J.P. Morgan’s Global Special Opportunities Group at a valuation of $1.3 billion, giving it a portfolio of loans and special situations investments in Australia and across Asia. It followed the acquisition by buying GE Capital’s commercial lending and leasing portfolios in Australia and New Zealand in 2015.
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