ADM Capital’s new $ 178 million fund targets direct lending in Asia


LONDON, Nov. 27 (LPC) – Asian direct lending takes another step forward with the definitive closure of ADM Capital’s new $ 178 million Asia Secured Lending II (ASLF II) fund, which will invest in emerging Asian countries and will specialize in the non-market. private loans from its regional network in 15 countries.

The fund is designed to support growing businesses and lend where bank financing remains scarce by providing direct three to five year bilateral loans to small and medium enterprises (SMEs) that respect environmental, social and governance principles.

Private debt markets are booming in Europe and the United States as the bank downturn and regulation after the financial crisis created a huge global opportunity, but development has been slower in Asia due to the geographic diversity and legal jurisdictions in the region.

Companies like ADM are filling the void by lending to successful companies that have been unable to access financing through traditional channels as Asia’s economic growth continues at a rapid pace. Deals can be closed quickly and often allow entrepreneurs to own and grow businesses longer before selling them to private equity firms.

“There is a strong dynamic of growth in Asia, it is not only from east to west, it is from north to south with intra-regional trade, investments and travel. Despite the global macroeconomic challenges, Asia feels like it has its work cut out for it, ”said Christopher Smith, head of investor relations and marketing at ADM Capital.

Investors participate via a syndicated loan platform with a senior revolving tranche and a junior tranche which allows the capital to be recycled during an availability period of six years. Loans generate returns in their teens and are secured by a set of comprehensive covenants, which is becoming increasingly rare as the United States and Europe continue to move towards restrictive loans with little protection from lenders.

“There is a race to the bottom in the deterioration of alliances in the rest of the world. We don’t see this in Asia, we have been able to build portfolios and will continue to do so, with strong covenants packages and good downside protection. We don’t lose trades based on our engagement requirements, ”said Smith.

SEED CAPITAL

ASLF II, also known as Somei Lending Platform, had commitments of US $ 50 million from US government development finance institution OPIC and US $ 10 million from Calvert Impact Capital. . IFC and another investor initially provided seed money in 2016.

ASLF II, which has an investment grade credit rating of BBB + by Egan Jones, has already made seven investments after the first close in September 2017, focusing on China, Indonesia and Thailand in sectors ranging from healthcare and education to real estate, media, consumer and business diversified in consumer, retail, internet and software.

The fund is second in Hong Kong and London-based private credit investment manager ADM, which already manages $ 1.6 billion in private market assets. ASLF I was launched in 2012 in partnership with IFC to support small businesses, stimulate economic growth and create new employment opportunities in emerging economies in the region.

ADM Capital was founded in 1998 and initially focused on distressed debt, but then turned to private credit and direct lending and issued over US $ 850 million or private secured credit loans. in 2018 to date.

“Credit is our DNA,” Smith said.

The company also closed the US $ 450 million Cibus Fund in October, a private equity and co-investment vehicle created to invest in sustainable and fast-growing food chain companies in Europe and New Zealand. . (Report by Tessa Walsh edited by Alasdair Reilly)

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