The filing shows that at least 10 investors have backed Avenue’s latest fund. Among investors which committed to Fund V, College of William and Mary and Ewing Marion Kauffman Foundation disclosed their allocations to the fund.
The firm came back to the Asian market in 2016 after a decade-long break with a target of $500 million, according to PDI data. The 2006-vintage predecessor, Fund IV, gathered $3.1 billion although the firm decided to cut the capital available to $2.7 billion in 2009 as it was seeing fewer distressed opportunities in the region, as per PDI reporting.
“Avenue has two main strategies in Asia,” Anil Gorthy, a Hong Kong-based senior portfolio manager of Avenue Asia Strategy told industry participants at the Asia Private Equity Forum 2018 held on January 17 in Hong Kong.
One strategy is lending to companies which cannot find financing from banks because either they are small or a little bit distressed, and Avenue does special situation lending to them, according to Gorthy.
“The other strategy is acquiring non-core assets from those companies which have a presence in Asia but are shutting down their branches or selling loans or their assets, and we would like to buy them at an attractive price,” he said.
In terms of geographical focus, the firm is investing in only five countries in the region: Australia, Korea, China, India, and Indonesia.
“We do not invest in other countries because we think we should stay out of what we cannot control although we have been in the region over 19 years,” Gorthy added.
Its exit strategy is likely to be trading debt instruments. “Credit is something that the longer you hold it, it does not necessarily get better because you have the credit cycles,” Gorthy noted, adding that, “focusing on exit is the most important strategy.”
“You need to have experience of going through cycles in the market, and I think that distinguishes [you from your peer group],” Gorthy said.
The firm runs US, European and Asian special situations funds and had approximately $9.1 billion in assets under management as of December 31, according to a public disclosure from the firm.