PDI annual awards 2017: Asia winners

The winners and runners-up to the PDI annual awards 2017 in Asia.

Lender of the year

1. SSG Capital Management
2. CLSA
3. Adamas Asset Management

Edwin Wong

For the third year in a row, Hong Kong-headquartered private credit and special situations asset management firm SSG Capital Management has won lender of the year. Despite strong con­tenders in the category, including CLSA’s lending platform and Adamas Asset Management – which is targeting $500 million for its latest China-focused direct lending fund – SSG secured a clear majority of votes.

SSG, founded in 2009, has pulled in $2.5 billion for two of its latest funds: SSG Capital Partners IV, its fourth spe­cial situations fund, which surpassed its original target of $1.25 billion to raise $1.7 billion in the middle of 2017; and Secured Lending Opportunities II, its second senior debt vehicle that raised $815 million last year.

SSG launched its first senior debt fund – SSG Secured Lending Opportunities I – in 2015. The vehicle (SLO) took less than six months to surpass its $300 million target, raising $325 million. SSG then quickly raised more than double for its successor with most LPs also making commitments to SSG’s latest flagship distress fund.

The firm says its Secured Lending Opportunities series aims to provide growth financing to corporates across the region with a focus on quality credit. According to SSG’s CIO Edwin Wong – who recently described the firm’s latest SLO vehicle as “a per­forming loan vehicle” with a growth mandate – direct lending is in great demand thanks to a growing investor base that favours the combination of enhanced returns, regular cash yields and quality Asian credit. According to PDI data, SSG has been delivering re­turns of over 15 percent for its unlevered secured lending series. SSG Capital Management has raised $1.7 billion to date for SSG Capital Partner IV.

Distressed debt investor of the year

1. SSG Capital Management
2. Bain Capital
3. Apollo Global Management

Distress specialist SSG Capital Management saw off competi­tion from private equity behemoths Bain and Apollo to secure this award for the third year in a row, helped by its focus on maintaining a strong local presence in the countries it operates in. The firm invests across Asia-Pacific with offices in Shanghai, Singapore, Hong Kong and Mumbai and a remit that covers In­dia, China and South-East Asia. SSG is also active in South Korea and Australia. “We have been able to differentiate ourselves by combining our local reach and experience with the breadth of our onshore and offshore platforms to come up with unique so­lutions for our clients,” SSG CIO Edwin Wong said at the HKVCA Asia Private Equity Forum in January.

The firm had over $4 billion in assets under management at the end of December 2017. The lion’s share of that comes from the latest iteration of its flagship fund SSG Capital Partners IV, which held a final close of $1.7 billion in August 2017, garnering commitments from San Francisco Employees’ Retirement Sys­tem and the University of Michigan, among others. The vehicle nearly doubled the $915 million raised for its predecessor, SSG Capital Partners III, in 2014.

Infrastructure debt fund manager of the year

1. Mizuho Global Alternative
Investments
2. AMP Capital
3. Ping An Life Insurance

Tokyo-headquartered Mizuho steals the crown

This is the first time this category has not been won by Australia’s AMP Capital. Tokyo-headquar­tered Mizuho Global Alternative Investments picked up the infra­structure debt fund manager of the year award after clinching more than half the votes.

The alternatives arm of Ja­pan’s Mizuho Financial Group is recognised for raising more than $300 million for its maiden project finance fund. The new vehicle will target project financ­ing and offshore brownfield projects.

“The biggest advantage is that we could capitalise on the platform of our parent company, Mizuho Bank,” says Jack Wang, an investment officer in MGAI’s project financing team. He adds that the bank has been building up a track record in project fi­nance for over 30 years. “As the fund only invests in projects with expected return rates that are 150 basis points [over the base rate of the project], we are aiming at plus 200 basis points in the original currency.”

As far as Wang is concerned, the biggest risk the firm is try­ing to mitigate is the default of a project. MGAI has a senior-only approach for infrastructure debt investments so that the recovery rate can be higher than with other positions in the capital structure.

Real estate debt fund manager of the year

1. SSG Capital Management
2. IDFC Alternatives
3. MaxCap Group

SSG Capital Management has picked up real estate debt fund manager of the year for a second time. SSG, which also won the award in 2015, has been carving out a niche for itself in Asia by investing in developed markets like Australia and addressing structural gaps in emerging markets such as China and India.

A prolonged slowdown in the real estate sector has fuelled corporate demand for private debt solutions in India where banks will typically not lend against land for development. Meanwhile, in China, SSG has provided financing to local developers to complete mixed-use residential and commercial projects. The firm is also investing in distressed situations in the country to unlock the value of underlying real estate assets after restructuring.

SSG has also provided capital for the acquisition and redevelopment of two separate commercial properties in South Korea, which are expected to be repositioned and brought back to the market.

Deal of the year

1. Laser Clinics Australia (Partners Group/KKR)
2. Pepper Group (KKR)
3. Global Gateway Logistics City (BPE Asia Real Estate)

Edward Tong

Partners Group made its mark in Australia with a unitranche loan in support of KKR’s acquisition of a majority stake in Laser Clinics Australia. When it comes to due diligence, Partners Group says its seeks good companies with solid credit metrics, a healthy balance sheet and the prospect of a good return to compensate for the risk being taken.

“The key question is, ‘Can the company stand on its own feet and is it able to service the debt that the sponsors put on the balance sheet?’,” says Edward Tong, a Singapore-based senior vice-president and head of private debt in Asia-Pacific at Partners Group.

As a credit investor, Tong focuses on issues such as looser terms and higher leverage. He says lenders compete most on pricing and terms. On the corporate LBO side, he estimates there are more than five Asia-domiciled private equity managers in the region with over $3 billion in dry powder that are increasingly looking at cross-border opportunities in the US and Europe.

“I see the opportunity to support their financing needs globally as an upcoming trend,” says Tong, who considers healthcare, information technology and software as sectors with the most potential for his credit investments.

Fundraising of the year

1. SSG Capital Management
2. Adamas Asset Management
3. AMP Capital

Special situations specialist SSG Capital Management had one of its most successful fundraising years in 2017. The firm pulled in over $2.5 billion across two vehicles in 2017, including a sidecar.

SSG enjoys the support of a broad base of blue-chip limited partners, with most of the capital coming from US pension funds, sovereign wealth funds, insurance companies, endowments, family offices and funds of funds. The firm raised $1.7 billion for its fourth special situations fund, SSG Capital Partners IV. SSG’s second direct lending vehicle raised $815 million, hitting its hard-cap.

“How fast we come back to the market depends on the opportunity set. So far, we are seeing a good pipeline of dealflow,” says Tobias Damek, a managing director at SSG.

Its first performing loan vehicle, SSG Secured Lending Opportunities I, held a final close at $325 million in September 2015. Its special situations fund, SSG Capital Partners III, closed at $915 million in May 2014. According to PDI data, SSG Capital Partners IV is the largest Asia-focused special situations fund to-date.

Law firm of the year

1. Dechert
2. Hogan Lovells
3. King & Wood Mallesons

In addition to providing deal structuring advice to private debt managers, Dechert has a strong track record of fund formation mandates in Asia. The team, based in Singapore and Hong Kong, works as part of a 200-strong global fund formation effort.

Funds established last year included those targeting direct lending and distressed debt. Dean Collins, from Dechert’s Singapore office, led the establishment of a $500 million fund focused on Chinese non-performing loans for a London-based investment firm. The vehicle was formed in conjunction with a Chinese asset management company.

“We continue to see the growth of private credit in Asia and are making sure that all of the technology and experience gained from our colleagues in the US and Europe is appropriately applied and adapted for the Asian markets,” says Collins.

In terms of fundraising, Dechert is seeing more mandates involving Asian private credit managers trying to raise funds in Europe, which often requires a different approach. “Because investor preferences and the regulatory environment have evolved in Europe, it is harder to solely raise a Cayman vehicle,” Collins says, adding that more sponsors are setting up European structures in parallel with their Cayman Islands-domiciled structures.

Placement agent of the year

1. Mercury Capital Advisors
2. Shinhan Investment Corporation
3. MVision

Enrique Cuan

This year is the second consecutive win for Mercury Capital Advisors. The New York-headquartered private fund placement and investment advisory firm has continued its rise by advising fundraises for Hong Kong-based SSG Capital Management.

The firm helped SSG raise three of its special situations funds and its second secured direct lending vehicle. PDI understands Mercury is also acting as an advisor to Baring Private Equity Asia for its Indian credit fund that launched in 2017 with a $500 million target.

The firm was co-founded in 2009 by Michael Ricciardi, Alan Pardee – both based in New York – and Enrique Cuan who splits his time between Singapore and London. Cuan is responsible for advising investors in Europe and Asia on alternative investments, as well as originating new fundraising mandates for the firm. All three were formerly Merrill Lynch managing directors in its private equity fundraising group.

Asked about the growth opportunities in the Asian private credit space, Cuan says: “We are still in the very early innings of a huge market trend.”

He adds that while more than a dozen Asian credit funds may have raised capital in the past two years, the amount of dry powder available is still a drop in the bucket relative to the opportunity.

Globally, Mercury covers over 2,500 institutional investors and its Asian coverage is growing with around 200 investors based in Asia. The firm says it had raised 13 oversubscribed funds in Asia, consecutively, as of the end of 2017.

The firm also provides advisory services in the areas of secondaries, co-investments, joint ventures and direct placements.