Shoreline Capital has closed the overflow fund for its recent Shoreline China Value III at $195 million, according to Benjamin Fanger (pictured), the firm’s co-founder and managing partner.
The China-focused distressed debt investor opened an overflow fund when its $500 million third fund was oversubscribed, as reported in June. The new fund and its corresponding supplementary vehicle bring Shoreline’s assets under management to over $1 billion, said Fanger.
The $195 million closing of the overflow fund was first reported by Dow Jones.
“China is being very active in working toward solutions for their growing pool of non-performing loans (NPLs). One of those solutions is transferring the bad debt into the market, so that bank balance sheets are not saddled with NPLs and banks can focus on their core businesses of taking deposits and lending,” Fanger told PDI.
That active approach has produced a raft of opportunities for the new vehicle which is targeting NPL investments in China, as well as distressed and special situations opportunities.
The firm recently partnered with US distressed investment firm Oaktree to purchase a $168 million portfolio of NPLs, according to a source close to the situation. The assets are mostly senior secured loans to a variety of industries, the source said, adding that Oaktree took 49 percent of the deal while Shoreline will lead the servicing of the loans.
The Guangzhou-based firm had invested around half of the $500 million vehicle across several transactions when the fund close was announced last month, with almost 1,000 NPLs in the portfolio.
The pick-up in deals prompted Shoreline to go back to its investors with the option to increase their allocation.
Shoreline was founded in 2004 and has around 30 professionals in China. The manager closed its first fund on $178.2 million in 2008 and its second on $303 million in February 2013 with a larger base of investors across North America, Europe, Asia and the Middle East.
Additional reporting by Anna Devine.