Fund focus: 9 Basil targets Thai distress

Thailand's 9 Basil, a recently established GP with a distressed debt focus, has spent the last two years struggling with surprisingly difficult technical hurdles getting started, from finding the appropriate fund structure to opening a bank account. All the while, the firm told potential LPs about its expectations of Southeast Asian bubbles bursting in areas such as real estate, e-commerce, and tourism. Then COVID-19 happened, and things started coming together.

Kris Panijpan, a co-founder at 9 Basil, jokes that the pandemic made his team look better than it deserved. But the firm's debut fund was supported by a strong family office network from day one and closed above target at $120 million with contributions from the likes of 2W Group, Bangkok University, and Daiwa Securities.

"Due to the way the timeline played out, our fund thesis ended up working remarkably well while we were fundraising," Panijpan says. "COVID-19 made things we anticipated would happen over a 3-4 year horizon happen over a six-month horizon. People who had listened to our pitch were calling us back and saying, ‘Everything you guys said would happen is happing right now.'"

One-third of the corpus has already been deployed, with early investment activity including distress debt platform Alpha Capital and microfinance provider Ngern Tid Lor. Two more transactions are in process. Check sizes range from $10-30 million.

Consumer brands, financial services, supply chain, and real estate will be targeted, but there remain hesitations about hospitality, which 9 Basil sees as a bubble still expanding due to state support. "We are concerned that that market may become crowded. We've heard there are at least three other firms raising funds right now in that space," Panijpan says.

9 Basil's key differentiators include a strong background in doing deal-by-deal work for family offices, which has infused a culture of flexibility into deal-making and set up the potential to pursue large transactions by tapping LP support. This is enhanced by a fierce sense of independence in a jurisdiction otherwise dominated by conglomerates and government-connected groups.

"We'll never drive your business in one direction or another because of a larger group agenda," says Schwin Chiaravanont (pictured), a co-founder of 9 Basil and founder of 2W. "We want you to do best as an independent business from an independent fund manager's perspective."

The wildcard in all this is politics. The protests that have shaken Thailand since July have added a layer of uncertainty to the pandemic, and there is no indication of how it will play out, in part because there have been few perceptible effects to date. Historically, social unrest in the country disrupts three economic areas: tourism, foreign investment, and public markets, all of which were already crippled by COVID-19 before the protests began.

"We're not seeing any dramatic negative effect at the moment. The interesting thing is, what if the COVID-19 situation improves but the political instability is still there," Panijpan says. "Then I believe we'll start to see some real impact."

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• Topics
• Southeast Asia
• Restructuring
• Credit/Special Situations
• Fundraising
• Thailand
• Distress
• Family office