Too much money chasing China distress

Funds are rapidly raising cash to invest in soured Chinese loans but a few leading private market investors question whether the capital can be put to work profitably.

Fund managers are raising billions of dollars to scoop up soured loans as growth in the world’s second largest economy slows, but a full-blown Chinese debt crisis remains a distant prospect.

Private equity firms KKR, PAG, and Baring Private Equity Asia are all raising funds from investors, hungry for the extra yield offered by alternative products such as non-performing loans NPLs.

Boston-headquartered Bain Capital has already raised $557 million for special situations in Asia, according to a regulatory filing. In May it bought a portfolio of NPLs in China worth $200 million.

However, as yet the pickings are...

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