Zerobridge highlights Asia distress opportunities

Established in 2017 by Rahul Kotwal, formerly head of the Asia Pacific special situations group at UBS, Zerobridge has asset management and advisory operations. The firm was in the process of raising a $350 million pan-Asia alternative credit fund, but advisory work has become a bigger priority following the COVID-19 outbreak.

“People with good businesses are looking for working capital because their revenue has vaporized,” said Michael Marquardt, COO of Zerobridge. “One company we are talking to has seen 40% of its orders canceled for the next six months. It’s a viable business, making $10-12 million a year and with some great clients in the US, but it needs capital for the next 6-12 months and it is worried about some of its current lenders. Rates are being pushed up and access to capital is harder.”

Zerobridge consults for a few large corporates on balance sheet restructuring and how to engage with banks. “You want to be proactive, but at the same time you don’t want to rush in because you could potentially be put on a watch list and the relationship moves to the workout group,” observed Marquardt. However, the firm spends most of its time advising smaller companies that need help restructuring debt. It is working with about 25 businesses, including some with financial sponsors.

Last week, Zerobridge announced a tie-up with boutique investment bank BDA Partners with a view to broadening its target client base. The plan is to combine Zerobridge’s capabilities in debt and restructuring with BDA’s experience in M&A and equity fundraising and have more meaningful engagement with corporate clients about their financial needs.

“Their coverage overlaps well with BDA’s. We can work together to help clients in all geographies in Asia, as well as deal with complex cross-border, acquisition and early-stage financings,” said Andrew Huntley, a senior managing director at BDA.

Zerobridge matches clients with private credit funds in its network, based on individual needs. The firm is seeing a lot of activity out of China and Hong Kong, especially from Chinese companies with global operations, as well as Thailand, Vietnam and Singapore. The starting point is the same, irrespective of geography: establish what levers a company can pull, whether that involves negotiating with existing lenders or looking at government support programs.

According to Marquardt, even though credit funds are concerned with deals they already have on their books, there is demand for new exposure. “Anyone with dry powder right now is in a great position,” he said. “It’s going to be harder to get capital than before, but if you are a good company with the potential for good returns once we get through this – and you have collateral – then you will be able to access the markets.”

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• Topics
• Restructuring
• Restructuring
• Credit
• Credit/Special Situations
• Asia
• Distress
• Zerobridge Partners