International Finance Corporation (IFC), a member of the World Bank Group, planned to support distressed companies in East Asia’s emerging markets, including Vietnam, with financing to ensure they can meet their financial obligations, regain creditworthiness, and preserve jobs, thereby contributing to sustainable growth, stated IFC in a statement.
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Companies in the region face challenges, despite strong economic growth. In some markets, following the global financial crisis, loan defaults among highly leveraged corporations have increased, and a ballooning of non-performing loans (NPLs) has locked in banking capital. As a result, financially distressed companies are unable to obtain credit to restore viability and rebuild their operations.
Through its global Distressed Assets Recovery Program (DARP), IFC works with partners to build regional platforms across emerging markets and catalyze other institutional investors to invest in distressed assets. The investment will enable Altus to set up a regional facility to invest in the Philippines, Thailand, Indonesia, and Vietnam, the latter two being nascent markets for distressed asset recovery. With this investment, IFC and AMC seek to support this growing and attractive market for investors.
"I am excited to embark on this next phase of Altus Capital’s expansion with our partners at IFC, AMC and other institutional investors,” said Pavan Gidwani, Altus Capital’s CEO.
“We welcome Altus playing a dynamic role as both a hands-on investor and an asset manager within this growing region, actively assisting to unlock value in viable but underperforming middle-market companies, as well as in hard assets in need of redevelopment and repositioning. Our track record provides many documented successful turnaround stories in various sectors and markets, all with high social and development impact. We are fully committed to build upon that continuing legacy with our new Fund," he added.
Altus Special Situations Asia 1 LP will have up to US$272.5 million of deployable capital. IFC, IFC Financial Institutions Growth Fund, and IFC Emerging Asia Fund will be contributing up to US$15 million, US$25 million, and US$25 million, respectively. Altus Capital Corporation will contribute US$7.5 million.
“IFC’s support is likely to promote greater market integration for distressed asset resolution through the creation of a regional platform. This will mobilize much needed regional and international capital for distressed companies to make them viable again,” said Vivek Pathak, IFC director for East Asia and Pacific. “Subsequently, these companies can plan for long-term, sustainable growth that increases job opportunities, driving economic growth in the region," he added.
IFC has worked with Altus - an existing DARP partner - since 2012. As of March 2018, IFC DARP has deployed over US$5.5 billion focused on distressed assets globally. In Asia, IFC DARP’s active projects include IFC commitments of approximately US$525 million and co-investments of approximately US$560 million.
Altus Capital, an investor and asset manager, focuses on special situations and structured finance investments in Southeast Asia.
