Hong Kong, October 26, 2006
— The International Finance Corporation, the private sector arm of the World Bank Group, is to make a $50 million equity investment in the Avenue Asia Special Situations Fund IV, L.P. The fund will contribute to the disposal or restructuring of nonperforming assets by focusing on individual assets and asset pools. IFC’s investment is part of ongoing support of workout models for distressed assets in emerging markets. While preservation of jobs and capital is the ultimate goal, the fund will help improve the balance sheet of banks by providing another venue to dispose of their NPLs, a significant and growing burden on their capital adequacy. This will help banks cater better to the needs of their creditworthy clients. The fund will also use innovative financial restructuring techniques to help restore over-leveraged companies to sound financial health as well as provide them with better access to international investors. This should help the companies lower funding costs, extend debt maturities, or both.
The fund is expected to invest mainly in China and India. It will invest to a lesser extent in other Asian markets, including Indonesia, the Philippines, and Thailand.
The fund will target nonperforming debt or debt-related securities of companies in financial distress. Investments will involve companies that are in liquidation, reorganization, or bankruptcy, as well as those that are undervalued due to poor economic conditions or extraordinary events. It will also focus on industries that are in turmoil. Avenue Asia employs an in-house due diligence approach as part of its investment strategy.
"IFC’s participation in the fund reinforces our commitment to distressed debt as an asset class in the region and our support of Avenue Asia as a top-tier dedicated manager of such assets," said Richard Ranken, IFC’s Director for East Asia and the Pacific.
Haydee Celaya, IFC’s Director for Private Equity and Investment Funds, added, " With our ability to leverage individual transactions as well as exercise co-investment rights and participate directly in the equity tranche of distressed companies, IFC will be able to play a much more active role in the workout process. This will assist in creating a strong credit culture,"
"Our hopes are that Avenue Asia's investment strategy 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, co-founder and Managing Partner of Avenue Capital Group.
About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, is the largest multilateral provider of financing for private enterprise in developing countries. IFC finances private sector investments, mobilizes capital in international financial markets, facilitates trade, helps clients improves social and environmental sustainability, and provides technical assistance and advice to businesses and governments. From its founding in 1956 through FY06, IFC has committed more than $56 billion of its own funds and mobilized an additional $24 billion in syndications for 3,531 companies in 140 developing countries. With the support of funding from donors, it has also provided more than $1 billion in technical assistance and advisory services. For more information, visit
www.ifc.org
.
About Avenue Capital Group
Avenue Capital Group manages assets valued at approximately $12 billion as of September 30, 2006. Founded in 1995, Avenue is headquartered in New York, with offices in London, Frankfurt, Luxembourg, and has eight offices throughout Asia. Avenue is led by its founders Marc Lasry and Sonia E. Gardner.
