CreditEase plans allocation to US distressed debt

The fund-of-funds manager will explore opportunities in the US distressed debt market as it seeks dislocations in asset pricing.

CreditEase Wealth Management, the wealth management arm of CreditEase, a Beijing headquartered investment firm, is planning to gain an undisclosed amount of exposure to the US distressed debt market in the first quarter of 2019, according to Li Lin, a Hong Kong-based managing director and head of asset allocations strategy research at the firm.

She told Private Debt Investor that one-third of CreditEase’s private equity investment is focused on overseas opportunities. She added that its fund-of-funds series is the main source of capital for distressed debt allocations. The fund-of-funds vehicle is seeking opportunities in the manufacturing, industrial and energy-focused sectors.

CreditEase believes that the US economy will see stable growth and that the growth trend will be slightly slower in the second half of this year and early 2019. “On a trend basis, US [economic] growth is going to decline. That is our core view,” she added.

The investment firm’s fourth-quarter asset allocation plan published on 16 October points out that for overseas private equity, its investment portfolio will maintain a diversified and balanced allocation on a cross-strategy, cross-region, and cross-industry basis, continuing to focus on North America, while moderately increasing its weighting to Asia opportunities.

The statement indicates that the domestic private equity industry in China will face continued difficulty in fundraising and [some] private equity investment firms are under increasing pressure to exit legacy portfolios and generate long-awaited liquidity for institutional investors.

Further details on the amount of capital to be deployed and the firm’s existing allocation to the distressed debt strategy could not be disclosed by publication time.

Separately, PDI previously reported that CreditEase’s latest US-focused private debt vehicle, Offshore Private Credit Fund, is targeting other marketplace lending platforms. It was confirmed to PDI that the fund was launched in 2015 with a three-year fund life and was sized at $100 million as of 15 June.

The firm  launched its latest fund-of-funds vehicle, CreditEase Global Fund of Funds III, in June, with an initial target of $300 million, according to data provided by sister publication, Private Equity International. The fund-of-funds vehicle mainly invests in financial services and healthcare industries. The fund-of-funds vehicle mainly invests in financial services and healthcare industries.

CreditEase Wealth Management focuses on providing global asset allocation services to high-net-worth individuals and Chinese investors.