Five minutes with… Warren Allderige

Warren Allderige, CEO and Managing Director of Pacific Harbor Group, a Hong Kong-based fund manager that looks at special situations funds, stressed and distressed debts, recently spoke to PE Asia about market turmoil and the opportunities that presents some investors.

How has the volatility in the public markets around the globe affected Asia’s credit markets?

The current crisis that is impacting Europe and the US has caused many traditional lenders to pull back from Asia, even though the fundamentals remain sound generally. A typical response is for traditional lenders to delay funding decisions and place loan applications on hold. Asia’s growth story is not on hold, and Asian entrepreneurs miss real money making opportunities while waiting for traditional lenders to regain their confidence and resume funding. At the same time, global companies are coming to Asia to exploit opportunities and they also require funding for their new local operations. The cycle in Asia is entrenched and there will be ongoing needs to fuel growth through private financing.

What’s your outlook for economic growth in China?

China is the engine of Asia’s growth activity. The more activity and growth that occurs in China, the more regions like South-East Asia and North Asia will benefit. Fundamentally, the story is very much intact and the story is around a strong manufacturing base, rising domestic demand and potential for intellectual capital growth and innovation. This is a once in a millennium occurrence which is not going to change any time soon. Sure, you will have corrections and pauses, though China today is experiencing what America experienced after WWII. That is, re-shaping of the economy and long-lasting growth. China is different from other markets such as Japan. With a young population, they can keep increasing value for a long time.

What are the challenges to raising funds in Asia for alternative investments?

We are seeing investors becoming more cautiously optimistic about Asia. Investors are still being drawn to Asia as they see it as a growth market, yet the general optimism we saw at the start of 2011 is weaker. While the level of optimism may be lower, the feeling is not gloomy. We are seeing greater investor interest in managed accounts and segregated investments, for example. In this environment, savvy investors still want to be part of the opportunities presented through the Asia growth story, though on slightly different terms.