International Finance Corporation, a member of the World Bank group, is refocusing on distressed investing across Asia via its Distressed Asset Recovery Platform program.
IFC’s DARP is a global platform that focuses on the acquisition and resolution of distressed assets across emerging markets. It is sized at $7.4 billion, of which $4.8 billion comes from IFC’s co-investors, Private Debt Investor understands. Total global commitments to the DARP program were sized at $7.3 billion as of July 2019, according to a public disclosure.
It is understood that DARP investments are driven by the market needs and resources of the co-investors, rather than pre-determined allocation targets.
Notably, DARP has several active platforms with managers including ADM Capital, Clearwater Capital Partners (part of Canada’s Fiera Capital since 2018), and Altus Capital, a Manila-headquartered alternative investment firm.
The latest investment is with Collectius, a debt collection and receivables acquisition company headquartered in Singapore. For the new distressed asset recovery platform, IFC has committed $38 million, of which $8 million is in the form of a minority equity investment in Collectius, Rosy Khanna, IFC’s financial institutions group industry director for Asia-Pacific, has confirmed.
The platform, currently sized at $60 million, plans to acquire unsecured debt in five target markets – Indonesia, Philippines, Malaysia, Thailand and Vietnam – according to company statements from IFC and Collectius.
“It is estimated that our investment in Collectius will help local commercial banks offload more than $1.4 billion of NPLs through sales to the DARP NPL Platform,” Khanna said.
Offering her view on monitoring the underlying investments made via IFC’s DARP program, Khanna told PDI: “Using Collectius as an example, we have teams of professionals that specialise in distressed asset investments who will work with Collectius during the life of the platform… We will be involved in all NPL portfolio acquisitions, and we also have a system in place to monitor the performance of the portfolios and track the development impact during the life of the investment.”
According to Khanna, DARP has enabled banks to offload more than $33 billion of NPLs, while helping over 18 million households and SMEs to resolve their obligations and regain access to formal credit since its inception in 2007. DARP began in Latin America and has expanded to Eastern Europe, Asia, the Middle East and Africa.
“DARP also aims to stimulate the development of secondary NPL markets by mobilising capital from co-investors for the acquisition and resolution of distressed assets,” she added.