Hong Kong, May 21, 2004 –
The International Finance Corporation, the private sector arm of the World Bank Group, announced an agreement to make a $40 million equity investment in the Avenue Asia Special Situations Fund III, L.P. The fund, which has a target size of $600 million, will contribute to the disposal or restructuring of nonperforming assets by focusing on individual assets rather than on asset pools. IFC’s support for this fund is part of a new stage in IFC's strategy to encourage workout models for distressed assets in emerging markets. The fund is likely to invest mainly in Indonesia, the Philippines, and Thailand and to a lesser extent in China and other Asian markets.
The fund will target noncontrolling investments in debt or debt-related securities of Asian companies in financial distress. Investments will involve companies that are in reorganization or bankruptcy, in industries that are in turmoil, or in companies that are undervalued due to economic conditions or extraordinary events. Avenue Asia employs company-specific due diligence as part of its investment approach to credits of distressed yet viable companies in need of financial restructuring.
"IFC can play an important role by helping banks and government institutions in the region gain another avenue to dispose of their nonperforming loans," said Javed Hamid, IFC director for East Asia and the Pacific. Teresa Barger, IFC director for Private Equity and Investment Funds, added, "With wide-ranging experience in the United States and Asia we believe the Avenue team is positioned to make recommendations to companies and cocreditors on restructuring options. This will contribute positively to the workout process as they pursue their investment mandate,"
"Avenue Asia's investment strategy is consistent with and will further IFC's mission of promoting sustainable private sector investment in developing countries. We look forward to building on this relationship and realizing our shared goals in the years to come," said Marc Lasry, cofounder and managing partner of Avenue Capital Group.
Avenue Capital, with over $3.3 billion of assets under management, is considered one of the pioneers of the distressed debt market in the United States. Avenue Asia has been operating the Southeast Asian distressed markets since 1999 and has approximately $850 million invested in Asian distressed debt.
The mission of IFC is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people's lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through 2003, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC's worldwide committed portfolio as of 2003 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
