Hong Kong-based private debt manager Adamas Asset Management and Ping An Trust have officially launched a new joint venture which will lend to high-growth companies in Greater China.
The vehicle, Ping An’s first US dollar fund, has a $500 million target and is nearing a first close, PDI understands. It is also the first time that Chinese insurance company Ping An Group, of which Ping An Trust is a subsidiary, has teamed up in a joint venture.
Investment will aim to bridge a funding gap that exists for “quality small to medium-sized enterprises (SMEs) that are seeking to grow to the next level”, Adamas co-founder and chief executive officer Paul Heffner said.
“In China, 90 percent of SMEs don’t have access to traditional bank financing and public equity markets, hindering the rapid growth of high quality companies,” he added.
Liu Dong, chief executive of private equity investments group at Ping An Trust, said: “We are pleased to work with Adamas. Our collaboration aims to leverage on Ping An Group’s resources, asset management and advisory experience as well as risk management expertise.”
The fund will distribute an 8 percent non-compounded per annum rate of return to senior limited partners and a 14-16 percent net return to each subordinated limited partner.
The JV has an offshore US dollar fund structure but capital will be used to make loans with onshore structures. It will have a gross internal rate of return target of 15-18 percent over the life of the fund and a two-year investment period along with a one plus one-year divestment period. Typical loan tenures will last 12-36 months and loan sizes will range from $30 million to $150 million.
Adamas has about $650 million in assets under management and runs two private debt funds. Asia Private Credit Fund has had eight full realisations. It has a gross IRR of 28 percent and 1.7x gross cash multiple with more than $36 million dividends distributed as of 30 June 2015.
Its Greater China Credit Fund has financed six deals. Three distributions have been paid in March and September 2014 and September 2015, totalling 17.1 percent of committed capital to early investors since the launch of the fund. It is expected to close by the end of 2015 on $275 million.