Pangaea Capital Management, a special situations investment manager headquartered in Singapore, is making progress towards raising a $1.5 billion debut Asian fund.
According to chairman and chief executive Robert Zulkoski, a former member of Colony Capital's investment team in Asia Pacific, the firm has secured $750 million in commitments and is poised to hold a third close on approximately $1 billion by mid-September. A final close on the fund is expected before year-end, Zulkoski said.
Pangaea targets distressed companies that are coming out of creditor-led work-out situations and debt defaults resolutions. In addition, it will invest in property assets as well as real estate operating companies. The fund aims to generate a net IRR in excess of 20 percent, Zulkoski said.
Among the fund's investor base is a group of Asian limited partners that Zulkoski described as ?special investors?. The group includes a number of commercial banks, a securities firm, two government investment companies and a trading house. According to Zulkoski, the special investors play an important role in helping the firm source investments: ?Our alpha is partially generated by the ability to source proprietary deals. Our LPs are active participants and not just passive investors, and some have co-investment rights.?
In addition to the Singapore headquarters, Pangaea has offices in Shanghai, Seoul, Tokyo, Hong Kong and New York. It has 21 investment professionals including six principals.
When he started the firm, Zulkoski was joined by eight former colleagues from Colony Capital. Pequot Capital Management, a US hedge fund, has a 10 percent stake in the business.
Pangaea has committed to six investments of which two are completed. Half the deals are in Korea, two in China and one in Japan. Last year the firm agreed to acquire a 6.9 percent stake in Huaxia, a Chinese bank, for $125 million. The deal is pending regulatory approval.
Along with China, Korea is another key market for the firm: ?We haven't been caught in any troublesome situation, and there is actually more going on in Korea than in Japan.? Zulkoski stressed that he wanted his fund ?not to be viewed as foreign vulture, but a local solution provider.?
Pangaea has eight partners and seven more junior investment professionals.