Avenue disputes China closure report

The New York-headquartered distressed debt investor says it is not closing its Asian operations, a claim put forward by a web site this week.

US distressed debt investment firm Avenue Capital is not closing its Asian operations and plans to raise another Asian fund in the future, a spokesperson for the firm told PE Asia.

“The Avenue Asia platform, which includes China, remains a core strategy for Avenue Capital Group,” the spokesperson said. “We are managing our existing Asia investments with the goal of maximising investor value, and intend to raise another Avenue Asia fund in the future to take advantage of opportunities in the region.”

A report on web site ChinaVenture claimed Avenue was closing its China operations. The report also claimed Avenue was selling its Asian portfolio, but the spokesperson said the firm is simply looking to realise its investments over time, which is the normal course of a private equity fund.

The firm is not looking to quickly divest the portfolio on the secondaries market, a person with knowledge of the firm said.

Earlier this year, the head of Avenue's Asia operations Malcolm Robinson left the firm and was replaced by Mark Harris.

Avenue's most recent Asian fund, Avenue Asia Special Situations Fund IV, closed on $3 billion in 2006. That fund is close to being fully invested, according to a person with knowledge of the firm. The fund was generating a 1.1x total value multiple and a 4.67 percent internal rate of return as of 30 December, 2010, according to performance information from the Washington State Investment Board.

In response to the credit crisis in 2008 and the liquidity challenges faced by some LPs at that time, the firm in 2009 gave LPs the opportunity to shrink their commitments to the fund, and eventually the firm slashed the size of the fund by 13 percent, to $2.7 billion. 

In October 2007, Avenue partnered with other investors including Macquarie Group to invest $54 million in Chinese education provider Ambow Education. The company raised a further $103 million a year later from Avenue, Macquarie and Actis. In July last year, Ambow filed an $138 million initial public offering on the New York Stock Exchange.

Founded in 1995, Avenue manages assets of approximately $13.7 billion as of April this year. In addition to having seven offices throughout Asia, the firm has presences in New York, London, Luxembourg and Munich.

Christopher Witkowsky contributed to this report.