CI targets emerging markets with $100m distressed debt fund

Commercial Intelligence, which focuses on buying distressed debt and then recovering value through litigation, recently held a first close on Global Distressed Alpha Fund III at $18m and will seek opportunities in Asia, Africa, Middle East and Latin America.

Commercial Intelligence (CI), a Swiss fund manager specialising in distressed debt purchase and recovery has set a $100 million target for its sixth fund, a spokeswoman from the firm told PE Asia.

Global Distressed Alpha Fund III (GDAF III)  will directly purchase distressed debt from businesses and institutions in Asia, Africa, Middle East and Latin America, reaping benefits upon settlement via arbitration or court ruling. It will target claims between $5 million and $300 million, the firm said.

The fund, which in December held a first close on $18 million, has received commitments from a global investment management organisation together with a range of family offices, private wealth managers and several high net worth individuals, the spokeswoman said.

Thus far, GDAF III has acquired two positions by way of a debt portfolio worth up to $368 million due to a Malaysian construction company now in liquidation, and a funding agreement with the curator / receiver of a South African mineworkers’ pension fund to finance legal action to recover lost money stemming from fraud committed by two listed companies which had been initially tasked to reorganise of the pension fund.

GDAF III is expected to invest up to $5 million in both cases over the next three years while pursuing recovery through international arbitration with independent arbitrators sitting in neutral forums – a process it predicts could take between two and three years to settle. In a separate document, the firm said it expected to reap “2.5 to 5 times the sum invested” for the latter deal, and payouts totalling up to $52.5 million for the former.

“We believe this is an excellent time to be launching a new distressed debt fund,” said Michael Shone, chairman and founder of Commercial Intelligence funds group in a statement.

“The market is growing in size as international barriers to trade and finance dissolve. Tough economic conditions are also increasing the appetite for creditors to seek closure either by selling or continuing to pursue debts that they would otherwise write off, a process that CI can help to facilitate,” he added.

Since its founding in 1987, CI has recovered more than $168 million for its clients. The firm has offices in Singapore, Johannesburg, Khartoum, Lusaka and Dubai.