SSG Capital Management, an Asia-focused special situations specialist, aims to raise up to $2 billion for two new funds with an eye on Indian distressed debt, a source familiar with the matter said on Monday.
The Hong Kong-based firm is targeting $750 million to $1 billion for one fund to invest in special situations and another $1 billion for a private credit strategy, the unnamed person said.
Demand for private debt has been rising of late among Asian investors, many of whom see it as an alternative source of yield now that illiquid assets such as private equity and real estate have been heavily bid up. Korea's Public Officials Benefit Association and Korea Teachers' Credit Union, for instance, are two institutions moving to increase their allocations.
SSG, founded by members of Lehman Brothers' Asia special situations group in 2009, is run by chief investment officer Edwin Wong and partners Shyam Haheshwari and Andreas Vourloumis.
Of particular interest to them now 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 in 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. 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.
Special situations on rise
In a May 2015 article posted on SSG’s website, Wong wrote that a growing number of firms managing international alternative assets were expanding their Asian special situations 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.
SSG Capital had raised $915 million for its third fund in 2014. In November 2012, SSG closed its second fund at $400 million, having closed its first in December 2010 with around $100 million.