The International Finance Corp (IFC), the World Bank's investment arm, has invested US$40 million in a fund targeting Asian troubled companies and institutions, helping them to restructure and return to viability.
The Avenue Asia Special Situations Fund III buys debt and related securities in countries such as China, Indonesia and Thailand.
The investment is the IFC's second in less than a month into Asian distressed assets.
'[After the Asian financial crisis,] a lot of companies were limping along, looking for opportunities to return to viability,' said Tim Krause, manager of the IFC's financial institutions group for East Asia and the Pacific. 'This investment represents an evolution, taking our distress work to the next stage.'
The US$600 million fund had also received investment from a list of the world's biggest institutions and pension funds, said Marc Lasry, managing partner of New York-based Avenue Capital Group, which managed the fund. He declined to reveal their identities.
Mr Lasry said the investors were aiming for a 20 per cent annualised return.
Late last month, the IFC pledged US$50 million to the $500 million Yangtze Special Situations Fund, managed by Los Angeles-based Colony Capital and Shanghai Industrial Investment Corp, the parent of Hong Kong-listed Shanghai Industrial Holdings.