ADM Capital has closed its Galleus fund to new investors, and will be launching its new Maculus fund at the end of the month.

Galleus, ADM's flagship distressed debt fund, soft closed in December last year. "No new investors will be admitted into the fund, but as capacity evolves over time, it will be allocated to existing shareholders," says Robert Appleby, ADM's Hong Kong-based director.

According to Appleby, Galleus' soft close reflects the fact that almost seven years on from the Asian financial crisis, the region's distressed debt space has become a little picked over. "There are fewer good returns from public debt," he says. "Although Galleus does have the capacity to grow, the expansion will be cautious in order to maintain the fund's target 15%-20% returns."

The Galleus fund currently stands at $320 million in size. Appleby says its investor base is diverse, coming equally for Asia, Europe and the US, and includes family offices, fund of funds, pension funds and three government entities, two from Asia and one from North America.

ADM's new Maculus fund will be launched at the end of the month. It will close at $120 million in size and has been sponsored by an Asian institution. Additionally there are two US based funds and one European bank involved.

Although the fund will invest in similar assets to Galleus, its structure is different, as it is a closed end fund with a five-year gestation period. Appleby points out that the new fund will also be less transparent. "Whereas Galleus' investments are marked-to-market by the street, Maculus transactions may not necessarily be that well known." Appleby says that the assets in this fund will have been discovered early and should yield a return of 25%-30%, higher than that targeted for Galleus.

Although he admits that it is much harder work to find and structure deals in Asia, Appleby says his new fund reflects the fact that opportunities do exist for those are willing to seek them out. He notes out that government reforms in some countries are allowing distressed assets to become more available. "For example, the Taiwanese government has only recently enacted a tax reform bill that allows banks to clear NPLs," says Appleby. He also points out that the Securitisation Act 2002 in India has paved the way for the creation of asset reconstruction companies. This has given rise to several opportunities in India that had previously been unavailable.

"It is going to be harder for those who are not on the ground in Asia and who are not dedicated to the distressed debt business to seek out the new opportunities in this space," says Appleby.

He adds: "ADM's pipeline is very robust, and Maculus is the first of several funds we are planning to launch."