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SSG Capital to raise $2 billion for special situations, private credit lending

LiveMint logoLiveMint 23-07-2017 Swaraj Singh Dhanjal

Mumbai: SSG Capital Management, the Asia-focused special situations investment firm founded by former Lehman Brothers executives, is raising close to $2 billion across two Asia-focused new funds, said two people aware of the development.

The new funds will provide SSG Capital, which has been scouting for opportunities in Indian distressed assets, a large quantum of dry powder as this space is starting to see traction. Founded in 2009 by Edwin Wong, Andreas Vourloumis and Shyam Maheshwari, SSG Capital Management has a focus on China, India and South-East Asia.

“They have started raising funds for two strategies —special situations and private credit. They are looking to raise around $750 million to $1 billion for special situations and another $1 billion for the private credit strategy. The fund-raising was launched around three months ago,” said one of the two persons cited above, requesting anonymity as he is not authorised to speak with the media.

A special situations fund invests in events that have impacted a company’s performance and valuation. These could involve investing in opportunities like restructuring of balance sheets, corporate spin-offs, and asset sales, among others.

SSG is currently one of the most active investors in the Indian distressed assets space, he said, adding that the firm is interested in steel and power sector assets.

According to the second person cited above, on the private credit side, SSG is scouting for investment opportunities that can provide it a return of at least 20%. “They are looking at opportunities such as promoter funding,” he said. He too requested anonymity.

The firm had last raised a $915 million fund, its third, in 2014, according to media reports. The firm raised its first fund in 2010 and the second in 2012.

Emails sent on Friday to SSG Capital Management managing partner and chief investment officer Edwin Wong went unanswered.

In the distressed assets space, last year SSG Capital was reported to be in talks with Ruias-promoted Essar Steel Ltd. SSG had offered to buy a little less than half of the company’s rupee debt through Asset Care and Reconstruction Enterprise Ltd, where it owns 49%, Mint reported.

However, the deal was not struck. Essar Steel, with debt of over Rs37,000 crore is one of the 12 major defaulters identified by the Reserve Bank of India (RBI). The RBI has asked banks to initiate insolvency proceedings against them under the insolvency and bankruptcy code.

SSG was the first foreign investor to pick up stake in an asset reconstruction company (ARC) in 2014, after foreign direct investment rules for capital raising by ARCs were relaxed.

In 2014, the firm acquired a 49% stake in Asset Care & Reconstruction Enterprise for around Rs 41 crore, according to media reports.

In 2015, Real estate developer Emaar MGF raised Rs600 crore from SSG Capital for its projects in the Delhi NCR region, reported The Economic Times.

SSG Capital, in 2015, also bought Amtek Auto’s debentures held by JPMorgan Asset Management Co., The Economic Times reported. The sale came after Amtek Auto’s credit ratings were downgraded, leading to the net asset values of the JPMorgan schemes holding these instruments tanking sharply.

SSG is not alone in the hunt for opportunities created by the almost Rs10 trillion non-performing loans mess in the Indian banking system.

Last year, billionaire Ajay Piramal-led Piramal Enterprises Ltd joined hands with private equity fund Bain Capital Credit to launch a $1 billion distressed asset investment platform.

In March, Infrastructure Leasing and Financial Services Ltd partnered with global private equity firm Lone Star to jointly invest in stressed infrastructure projects in India. The two have committed to invest around $550 million.

India’s largest lender State Bank of India has also partnered with Canadian asset manager Brookfield Asset Management Inc. to launch a joint venture fund in which the Canadian firm will commit Rs.7,000 crore to purchase distressed assets.

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