Apollo, IFC form $1b emerging markets distress partnership

IFC and Apollo will each contribute $500 million to the partnership, according to a disclosure. The project will have a global base in Luxembourg, with additional special purpose vehicles located in the markets where the assets are acquired. It will concentrate on purchasing debt of households and small and medium-sized enterprises, with the intent of stabilizing vulnerable borrowers.

The project seeks to combine the strengths of each partner, with IFC bringing along its knowledge of global emerging markets and Apollo its experience in non-performing loans. IFC believes its participation will also send a strong signal in favor of the attractiveness and transparency of secondary distressed asset transactions in emerging markets.

This is not Apollo's first venture into emerging markets distressed debt opportunities. Aion Capital Partners, its Indian special situations-focused joint venture with ICICI Venture, launched in 2013 and closed its first fund the following year at $825 million. Aion's investments include a INR6 billion ($90 million) commitment to drinks manufacturer and bottler Varun Beverages in 2015.

Distressed assets have attracted increasing levels of attention, particularly in India, where several private equity players both domestic and global have launched vehicles targeting non-performing loans.

On a global basis, KKR recently reached a final close of $3.3 billion for its second KKR Special Situations Fund, which focuses on distressed or event-driven situations. The firm also partnered with China Orient Asset Management and China Orient Summit Capital (COS Capital) earlier this year to invest in credit and distressed opportunities in China.

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• Topics
• Credit/Special Situations
• Consumer
• Financials
• Fundraising
• Apollo Global Management
• IFC