SSG targets $2b for new funds, eyes Indian NPLs

The funds will focus on special situations and private credit across Asia, not least distressed assets in India, a source familiar with the matter told FinanceAsia.

SSG Capital Management, an Asia-focused private-equity funds firm founded by three former Lehman Brothers executives, is seeking to raise up to $2 billion for two new funds, a source familiar with the matter told FinanceAsia on Monday.

The new funds come as SSG Capital vies for deals in special situations and private credit across the region and, specifically, Indian distressed assets, the person said, who asked to remain anonymous because discussions are still ongoing.

Founded by members of the Lehman Asia special situations group in 2009, SSG Capital focuses on credit and special situations investments in Asia-Pacific. The investment fund is run by its chief investment officer Edwin Wong and firm partners Shyam Haheshwari and Andreas Vourloumis.

The Hong Kong-based firm has informed its limited partners about the fundraising plan and the size of the special situations fund could be around $750 million to $1 billion, the person said. The firm aims to raise another $1 billion for investing in privately negotiated credit.

Of particular interest to the firm are Indian distressed assets and non-performing loans, the person said.

SSG bought a 49% stake in Assets Care & Reconstruction Enterprise, an asset reconstruction company in India, for an undisclosed amount in 2014, according to Dealogic. It also paid $87.09 million last year for a 40% stake in Future Supply Chain Solutions, an Indian supply chain and logistics company.

Indian banks held about $105 billion of gross non-performing assets as of September last year, including high-profile businessman Vijay Mallya’s $1.3 billion-worth of unpaid loans, official data shows. And in order to clean up this mountain of debt, the Reserve Bank of India has told its lenders to push a dozen of the largest defaulters into insolvency, making it easier to dissolve an ailing company. 

Investing in so-called special situations can involve a number of corporate actions, including tender offers, mergers and acquisitions, and bankruptcy proceedings. 

Private debt managers in Asia provide credit to small business owners, taking on more risk than would be the case if they invested in bonds issued by large companies but potentially earning higher returns.

Growing trend

In a May 2015 article posted on SSG’s website, Wong, a former managing director at Lehmans, penned that a growing number of firms managing international alternative assets were expanding their Asian special situation teams to help them navigate local regulations and other barriers to market entry and to better access strategic relationships in target markets. 

In addition, Wong said limited partners were becoming more and more knowledgeable about Asian private debt. “Many have recognised that the asset class offers a significant yield pick-up from comparable strategies in the US and Europe, and an attractive diversification from Asia private equity strategies.”

Wong declined to comment on his company’s fundraising plans when contacted by FinanceAsia.

SSG Capital previously raised $915 million for its third fund in 2014. In November 2012, SSG closed its second fund, which raised $400 million. The firm closed its first fund in December 2010 with over $100 million.

SSG's efforts form part of a growing trend. According to data provider Preqin, 83 Asia-focused private equity firms have raised $32.5 billion so far this year, representing 80% of the $42.5 billion raised in all of 2016.

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