PSource Asia distressed debt fund to seek $100 mln
LONDON, Jan 31 (Reuters) - Fund firm PSource Capital said on Thursday it will seek to raise at least $100 million for a fund to invest in non-performing loans in Southeast Asia, an area it believes offers opportunities due to regulatory changes. PSource Asian Recovery Limited will aim for a return of 15-20 percent a year by buying the dollar-denominated senior secured debt of firms that have defaulted on debt payments, PSource Capital managing director Soondra Appavoo told Reuters.
He said the implementation of Basel II banking rules, which are designed to ensure banks have set aside enough capital to cover risks on their books, and the need to comply with International Accounting Standard 39 were putting pressure on Asian banks to mark down the value of non-performing loans to realistic levels and then to sell them. "This is forcing Asian banks to sell a large proportion of their non-performing loan portfolio ... We think this is an absolutely outstanding 'here and now' opportunity," he said. "This is a secular story ... It's not particularly to do with the credit crunch, although that certainly improves the position for a buyer."
The fund's manager, Singapore-based hedge fund firm 3 Degrees Asset Management, estimates there is $1-2 trillion of non-performing loans in the Asia region. The fund will mainly invest in the unlisted debt of firms with a turnover of less than $200 million, particularly in Thailand, Indonesia, the Philippines, Malaysia and Singapore, the firm said in a note.
It is likely to list on the London Stock Exchange before the end of March, Appavoo said. PSource Capital, a subsidiary of Punter Southall Group, last year launched the PSource Structured Debt (PSSD.L) fund, which earlier this month said it plans to issue shares to more than double in size. (Editing by Paul Bolding)
