Hong Kong, April 26, 2004
- The International Finance Corporation, the private sector arm of the World Bank Group, has agreed to invest up to $50 million equity in the Yangtze Special Opportunities Fund, L.P. and the fund’s general partner, Yangtze China, L.P. This is the first distressed debt fund targeting China. It will pursue a multipronged strategy targeting non-performing loan pools, distressed real estate assets and corporate restructuring opportunities.
The general partner is jointly sponsored by Colony Capital, Shanghai Industrial Investment Company, and IFC. The first closing of the fund is approximately $100 million. The fund is targeting total equity commitments of $500 million.
Participation in this fund marks a new stage in a IFC’s larger strategy to contribute to the resolution of distressed assets in China. IFC previously supported auctions and direct sales of debt pools to investors. IFC investment in this fund will provide momentum to the process of distressed asset resolution by introducting new techniques. For example, the fund will be able to target single assets more effectively by bringing new management skills.
"IFC can play an important role in banking sector reform and the restructuring of state-owned enterprises in China by supporting vehicles like this. The Yangtze Fund addresses the distressed asset problem and contributes to the development of a positive credit culture," said Javed Hamid, IFC director for East Asia and the Pacific.
"This fund manager has built a unique joint venture platform, with a strong combined skill set and knowledge base, that is well equipped to enter the distressed asset market in China. We expect the establishment of this fund to help build local capacity and introduce international best practices for the asset class." added Teresa Barger, IFC director for Private Equity and Investment Funds.
"This is an exciting new venture for Colony Capital," said Thomas J. Barrack, Jr., chairman and CEO of Colony Capital and initial CEO of the Yangtze Special Situations Fund. "The Chinese government and business community are aligned in their determination to rectify many of the nation’s nonperforming and inefficient assets. We welcome the opportunity to become involved in that important effort. Our partner, Shanghai Industrial, is one of the leading businesses in China with an excellent reputation and significant government and business relationships that will be crucial in the process."
"Colony Capital is one of the leading private equity firms with a more than 13-year track record of success in restructuring, repositioning, developing and managing distressed or underperforming assets," said Chen Wei Shu, vice chairman of Shanghai Industrial. "Colony is highly regarded in Asia and their international experience in deal-sourcing and execution make this a very exciting venture."
For over 13 years, Colony Capital has invested over $10 billion worldwide in over 5,000 assets through various corporate, portfolio, and complex distressed transactions. Colony has a staff of over 100 and is headquartered in Los Angeles, with offices in New York, Paris, London, Rome, Madrid, Beirut, Hawaii, Tokyo, Taipei, Hong Kong, Shanghai and Seoul.
Shanghai Industrial, incorporated in 1981, is one of the leading Chinese conglomerates with more than $4 billion in assets. Based in Hong Kong with executive headquarters in Shanghai, Shanghai Industrial has expanded to over a dozen offices in China and nine international offices located in the United States, Japan, Russia, Australia, Germany, Brazil, South Africa, Singapore and Dubai. Shanghai Industrial has been a leader in promot-ing investment and development of nascent industries in China.
The mission of IFC, (www.ifc.org) 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.
