Beijing-based DCL investments, a spin-out from Shoreline Capital, has collected RMB3.7 billion ($500 million; €459 million) for its debut fund.
The vehicle is an RMB-denominated fund, and will focus on investing in non-performing loans, high-yield bonds, special situations and rescue financing in China.
“We estimated that there would be RMB5 trillion of non-performing loans in the Chinese banking industry. It is the best time for distressed investors to seek new opportunities right now,” Selina Zheng, chief executive officer of DCL Investments, told local media.
Chinese alternative asset manager CDH investments took a minority stake in the firm in return for its private wealth management arm helping the newly established firm to raise a third of its capital from high-net-worth individuals in China.
Earlier this year, global private equity firm KKR and state-owned firm China Orient Asset Management formed a partnership to co-invest in credit and distressed asset opportunities mainly in China’s real estate sector.
Hong Kong-based private equity firm PAG also reportedly launched a distressed fund in China last month, targeting between $400-500 million to acquire NPLs in the country.