PDI Awards 2015: Asia-Pacific

LENDER OF THE YEAR
SSG Capital Management

Highly commended: Adamas Asset Management, KKR

Last year belonged to SSG Capital Management, one of the fastest growing private debt lenders in Asia with $2 billion in assets under management. It surged past previous winners in this category, Adamas Asset Management and KKR to be crowned the lender of the year in Asia-Pacific.

SSG Capital Management is an alternative asset manager focusing on special situations in Asia including Japan. The firm was founded in 2009 by senior members of the Lehman Brothers Asia special situations group. It has raised four credit funds since 2009 and launched its first secured lending fund last year, extending its strategy to include performing assets.

Looking ahead, investors should take a global view of private debt opportunities, says SSG’s managing partner and chief investment officer, Edwin Wong.

“If you look at private debt globally, what Asia has seen is nothing when comparing to Europe or the US. It is still tiny. Here we focus on bespoke lending with better security and tighter structures so the risk reward is quite compelling,” he says.

DISTRESSED DEBT INVESTOR OF THE YEAR
SSG Capital Management

Highly commended: PAG, Shoreline Capital

SSG Capital Management’s dominance in the Asian distressed debt market continued in 2015, no doubt supported by its track record in special situation funds.

The pan-Asian asset manager has raised three special situation funds to date. Special Situations Fund III closed at $915 million in 2014 and returns are tracking above 20 percent without the use of leverage at fund level.

“Banks are capital constrained and have enough troubled assets on their books. They are looking to find homes for them. So that’s another good source for us. Usually when times are good, banks are less willing to let go of these assets,” says SSG’s Edwin Wong.

Looking forward to 2016, he envisages even brighter prospects for distressed lending in Asia on the back of public market falls and volatility.

REAL ESTATE DEBT FUND MANAGER OF THE YEAR
SSG Capital Management

Highly commended: Fortress Investment Group, KKR

SSG continued its clean sweep of the PDI awards in the real estate category, despite facing strong competition from KKR and Fortress.

Fortress had a strong year, closing its third Japan Opportunity Fund on $1.1 billion, while KKR continued to play actively in Indian real estate lending through its non-bank financial corporation in the sub-continent.

In Asia, real estate is a broadly defined sector and SSG Capital Management invests in both developed markets, such as Australia, and emerging markets including China and India.

“A lot of the financing we do has real estate in it. This is because it is usually the best type of collateral. Even if we lend money against a non-real estate acquisition, we might well ask him to put a few properties up as collateral,” says SSG’s Edwin Wong, adding that real estate is a very important element of their business.

INFRASTRUCTURE DEBT FUND OF THE YEAR
AMP Capital

Highly commended: Westbourne Capital, IFM Investors

AMP Capital has pulled off a hat-trick, winning the infrastructure category for the third year running on the back of an unparalleled track record.

The Sydney-headquartered firm lost no time finding opportunities for its $1.1 billion Infrastructure Debt Fund II, which closed in November 2014 and is at the “tail end” of deployment just over half way through its four-year investment period. This momentum prompted the firm to launch its third fund in five years, targeting $2 billion.

Andrew Jones, AMP Capital’s managing director, infrastructure debt, says it is anticipated that the 10-year closed ended-vehicle will attract repeat investors from Asia – many with larger commitments – and new investors from Europe and the US as it completes a series of closes this year.

And opportunities are not expected to abate in 2016 – in fact recent market jitters might lead to an increase, according to Jones. “Banks have been pretty aggressively targeting this space and so spreads were compressing particularly in the senior debt space. One thing that is likely to occur as a result of this current uncertainty is that banks will be a little bit more reluctant to offer as much money and will charge more for it, potentially opening up more room for institutional investors.”

DEAL OF THE YEAR
Vistra Group – Goldman Sachs and others

Highly commended: GE leasing asset sale – Sankaty Advisors;
GE Australia & New Zealand consumer finance unit sale – Varde Partners, KKR, Deutsche Bank

Taking almost 50 percent of the vote, Baring Private Equity Asia’s leveraged buyout of not one, but two corporate and trust services firms was the standout deal of the year.

Goldman Sachs led the fully underwritten $750 million financing package underpinning the Vistra and Orangefield transactions acting as lead-left arranger, bookrunner and syndication agent across all tranches. Credit Suisse, Jefferies and DBS Bank were the other three arrangers.

It was structured as a $515 million seven-year first lien loan and $185 million eight-year second lien loan – the biggest Asian subordinated deal of the year – plus a $50 million revolver.

A currency split appealed to investors in the US and Europe, while margins of Libor plus 375bps and Libor plus 800bps for the first and second loan respectively kept the home team happy.

“We had a triple challenge: the leveraged products we came up with were relatively unfamiliar in the Asian context; the underlying industry was not well known to US investors; and the markets were facing significant turbulence due to the Greek referendum,” says Rahul Patkar, a managing director and head of Asia ex-Japan leveraged finance at Goldman Sachs. Even this did not hamper the deal’s successful syndication and reverse-flex.

“The really encouraging news is that there is a willingness by the global investing community to buy and support high-quality products and issuers coming out of Asia,” Patkar adds.


FUNDRAISING OF THE YEAR
SSG Capital Management

Highly commended: Religare Credit Advisors, Shoreline Capital

SSG has had another great fundraising year, raising capital for its first secured lending fund which focuses on providing credit to performing companies, a departure from its heritage as a primarily special situations lender.

The fund is targeting gross returns of 15 percent and was closed at $325 million in October 2015, exceeding its $300 million target.

In contrast to the previous special situation funds which had a more diverse investor background, the latest fund is believed to have not been actively marketed rather raising the funds discretely through predominantly Asia-based existing limited partners of the manager.

Education, whether with investors or borrowers, is key for SSG’s success, SSG’s Edwin Wong, told PDI. This is because investors have always been in Asia for equity and therefore it is important to persuade them that a good debt strategy can generate a decent and safe return.

Overall, SSG’s investors include big pension funds, state and corporate pensions, sovereign wealth and family offices. The US is the biggest source of capital for SSG, but still being kept below 40 percent to ensure even distribution.

This year is set to be quieter as the asset manager has no plans to come back to the market until the current funds are deployed.

FUND FINANCIER OF THE YEAR
Citigroup

Highly commended: Deutsche Bank, Silicon Valley Bank

As fund managers become more sophisticated in the lines of credit used in Asia-Pacific investments, so the number of fund financiers grows. This was reflected in a strong shortlist comprising US-based firm Silicon Valley Bank, which has made in-roads in the region, and Deutsche Bank, which has a strong Asia-Pacific franchise.

It was, however, Citigroup which took first place growing its subscription facility portfolio by at least $2 billion in commitments over the past two years.

“We make sure we understand fund manager’s needs and are bringing the best product to market for their funds given their needs over the life of a vehicle,” says the team’s managing director, Terrance Philips.

In the last 12 months it has also closed several large syndications in Asia, with the largest being north of $700 million. In addition, it has closed deals ranging from $40 million to $270 million without the need for partners.

“I believe this is a reflection of the strength of Citi’s subscription lending programme and our commitment to serving funds of all sizes and focus,” adds Philips.


LAW FIRM OF THE YEAR
Kirkland & Ellis

Highly commended: Ropes & Grey, Ashurst

Kirkland & Ellis took the gong for law firm of the year with its list of restructuring deals featuring players from all the leading dramas. Chinese property company Kaisa, coal mining giant Bumi Resources, former Wall Street behemoth Lehman Brothers, US-listed forestry group Sino-Forest, industrial fishing firm China Fishery… The list goes on.

And the firm has A-list lawyers to match. It established the Asia restructuring team in 2014 by poaching former Hogan Lovells partners Neil McDonald and Damien Coles, and in January added a third former colleague, Kelly Naphtali.

She is hot on the heels of the November arrival of former Linklaters partner David Irvine, who is listed as a “go-to” leveraged finance lawyer in Asia by Chambers & Partners.

“With almost no exception we are involved in every big deal in some meaningful way,” says McDonald who leads Kirkland’s Asia restructuring practice. “We are unique in that we cover Indonesia and China in-depth and that is where the main situations are.”

With volatility in China, the devaluing yuan and the US dollar burden against the background of a general slowdown in China, the services of Kirkland & Ellis – as well as runners-up Ashurst and Ropes & Grey – are set to remain in demand.

PLACEMENT AGENT OF THE YEAR
UBS

Highly commended: First Avenue, Atlantic Pacific Capital

UBS’s eight-strong Asian fundraising unit delivered the Swiss investment bank to the top spot as placement agent of the year. It won recognition for commitments garnered from Asia for global vehicles. This included acting as placement agent on two of the four major fundraisings in the region – Baring Private Equity Asia’s $4 billion close and Pacific Equity Partners A$2.1 billion ($1.49 billion; €1.34 billion) raise.

Javad Movsoumov, executive director, UBS Private Funds Group, says the group has built strong relationships with LPs in Asia by offering a high quality product, being thoughtful about LPs needs and leveraging UBS’s network in the region. Not to mention a lot of leg-work.

“We actively track 150 institutional investors in Asia and pay significant attention to the large global pools of capital such as Greater China including Hong Kong and Taiwan, Korea, Singapore and Australia,” he says.

While UBS’s relatively heavy resource gave the group the edge over runners-up Atlantic Pacific Capital and First Avenue this year, its lead may be narrowing. First Avenue is building its Asia-Pacific reach by adding a Hong Kong office to its existing Sydney presence in November, so there is all to play for over the next 12 months.