Investment in weapons trade, drift-net fishing or child labour will be ruled out
Hedge-fund manager ADM Capital has partnered with the Asian Development Bank (ADB) to set up a fund that will invest in the region's estimated US$800 billion pool of non-performing loans (NPLs).
Anchored by a US$20 million investment from ADB and roughly equal investments from seven other investors, including ADM, $138 million had been raised in the first tranche, ADM Capital director Christopher Botsford said.
ADM will manage the fund, to be called the ADM Maculus Fund, and seek to buy out company creditors on a single asset or pooled basis, initiate financial or corporate restructuring, and then quit the assets at a profit.
The target size of the five-year closed-end fund is US$500 million and once 75 per cent of the present tranche is invested - towards the end of the year - additional investments will be canvassed, including contributions from Asian governments and institutions.
The Hong Kong government was approached to become an investor in the first tranche but declined, Mr Botsford said, despite the fact that the fund had an Asian 'development' nature no regional investors had contributed other than the ADB. 'We would like to see more investors coming from Asia in the second tranche,' he said.
ADM Capital director Denys Firth said the fund would be managed to restore core operations of the target firms to the point where the assets could be sold.
