SC Lowy, a Hong Kong-based boutique bank focused on distressed and illiquid assets, has been expanding its primary financing capabilities to corporations in the region, selling the credit to its investors, which are largely based in the West.
The firm has also been branching out into secondary high-yield bond trading, servicing hedge funds and traditional asset managers.
“We have expanded from being a secondary loan trading business to become an important secondary high-yield bond trading business, as well as a primary loan financing, structuring and facilitating firm,” says chief executive Michel Löwy.
Since Lowy co-founded the company in 2009 with Lee Soo-Cheon, it has traded more than $11 billion in bonds and loans. The pair previously headed Deutsche Bank’s Asian distressed products group.
Chetan Baxi, who has served as the firm’s chief operating officer since its inception, is now focused on special-situation investments, which encompasses new financing “with flexibility in the sense that it can be financing, development, mezzanine financing, private convertible, or it can be a loan with warrants”, says Löwy.
“Chetan was wonderful at being our COO, but he adds more value [to the firm by] building relationships with corporates across the region to originate primary deals for us,” Löwy tells AsianInvestor.
General counsel Steve Lyons has taken on the additional role of COO, while Jody Mariani was recently appointed to the high-yield trading team to lead sales, with a focus on institutional clients in Asia.
Mariani is one of eight hires over the last six months to a network of staff across Hong Kong, New York and London, raising the headcount to 32.
While easy credit has created ample liquidity in Asia, there are still pockets of opportunities in certain industries and companies.
In January, SC Lowy said it had completed an $85 million financing for Korea Line Corporation, a provider of marine transportation services. The deal marked the first debtor-in-possession financing of its kind in South Korea, where the shipping industry is providing distressed opportunities, as banks pull back lines of credit.
More recently, SC Lowy was named by Australian media last month as the buyer of a share of a syndicated loan from HSBC that had been made to Billabong, after the troubled surfwear brand breached debt payment terms.
SC Lowy has not publicly confirmed or denied its involvement in the transaction.
“We are working on other financing [deals] for corporates that are fine but not large enough to be regular clients of commercial banks,” says Löwy.
The private lending space in Asia has been expanding, say industry executives, with firms that include ADM Capital stepping in to provide loans to small and medium-sized companies in need of special opportunities financing.
SC Lowy’s financing activities are mostly focused on Asia-based corporations, although the firm is looking at the possibility of expanding it to Europe, where the firm set up a London office last year.
“Europe is a market we are developing,” says Löwy, who described it as a “next frontier” for the company.