Bain to acquire $200m of Chinese NPLs

The deal sees the firm partner with ShoreVest and follows its launch of a $1bn Asia-focused credit fund last year.

Bain Capital Credit will acquire a portfolio of Chinese non-performing loans (NPLs) valued at $200 million as the firm continues to grow its special situations strategy in Asia.

The firm will acquire the portfolio from a Chinese asset management company and the transaction will be fully funded by funds managed by Bain Capital Credit, according to a release.

“Bain Capital has one of the largest and most experienced investment teams in the region and we are well positioned to capture the significant opportunities arising from China’s large and growing NPL market,” said Kei Chua, managing director and head of China and North Asia for Bain Capital Credit.

ShoreVest Partners, a spin-out from China’s NPL specialist Shoreline Capital, will act as Bain Capital Credit’s master servicer on the portfolio. Last year, the firm was selected by Bain Capital Credit to be its exclusive partner for investing in Chinese NPLs.

Bain Capital introduced its first Asia-focused credit fund targeting $1 billion at the beginning of last year. The fund looks at both distressed debt and direct lending opportunities, according to sources familiar with the matter.

In order to scoop local opportunities, the company also entered into a $1 billion partnership with Indian conglomerate Piramal Enterprises to invest in distressed assets in India. In addition, it bought GE Capital’s commercial lending and leasing portfolios in Australia and New Zealand in a deal valued at A$2 billion ($1.5 billion, €1.4 billion), according to sources.

A lot of foreign managers have expressed interest in the $700 billion stock of non-performing loans in China, but only five foreign investors managed to close deals in 2016 due to high pricing levels, according to a PwC report.

The investors were Shoreline, which bought several portfolios, plus Lone Star Funds and Goldman Sachs, which each acquired two portfolios, while PAG and Oaktree Capital closed one portfolio each, according to the report.

Bain Capital has invested approximately $8 billion across private equity and special situations in Asia since 2005, $1.7 billion of which has been invested in China.