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Aimed at large institutional investors and family offices, the third Maculus fund is intended to be the biggest of the three, following in the footsteps of the first pair, which closed with $138 million and $338 million respectively. Maculus two closed in January 2006 and is currently 65% drawn down. ADM hopes to have 75% of that fund invested by September.
It is still too early to determine returns with the second Maculus fund as it is not easy to benchmark it until exits take place - often via an IPO or a private equity takeover. However, ADMÆs oldest and biggest fund, the Galleus fund, has recorded an annualised return of 16% since its establishment in 1999.
The Maculus funds buy out existing creditors on a single asset or pooled basis, in order to initiate restructurings at companies that are delinquent or at risk of entering into bankruptcy.
In March 2005, ADM polished off one of the biggest debt restructurings in Indian corporate history. Resolving India CementÆs debt burden had proven impossible, even with the intervention of IndiaÆs official Corporate Debt Restructuring system. ADM bought out $180 million of debt and took debt and equity warrant positions. This buyout led to a resolution with the creditor group. With lower external obligations, the company posted a profit shortly afterwards and its share price quadrupled. A happy ending saw India Cement list global depositary shares in Luxembourg which further deleveraged its balance sheet.
Unlike Maculus funds one and two, where opportunities were found in Thailand, China, Philippines, Indonesia and India, this new fund will not be confined to investments in Asia and will also invest in pan-European situations.
Robert Appleby, the taipan of distressed debt in Asia, says about this new strategy, ôFor eight years we have invested in situations where we feel confident that we can deliver private equity type returns with debt secured risk. Maculus 3 will expand its investments into Europe.ö
ADM has opened an office in London, where it has hired Mark Baker from Goldman Sachs, who will be working with Anthony Stalker, who formerly worked at Morgan Stanley. It is planned that subject to the regulatory approvals, they will act as originators and fund advisors for all ADMÆs European investments.
ADM currently has $1.5 billion in assets under management across three funds, the billion dollar Galleus fund followed by the first two Maculus funds in the series.
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