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Alternative Market Briefing

Hedge funds are putting more cash into China’s distressed assets

Wednesday, June 17, 2015

Komfie Manalo, Opalesque Asia:

Global hedge funds are forming a beeline in China’s distressed assets, as banks seek to offload huge volumes of bad loans amidst a slowing economy, reported Bloomberg.

This month alone, Shoreline Capital Management raised $500m for its third China distressed debt vehicle. The $850m Hong Kong-based hedge fund Argyle Street Management is taking a stake in a risk consultancy and debt-recovery venture with onshore and Taiwanese investors. And Belos Capital (Asia) is buying more bad Chinese loans than it was 12 months ago.

Nonperforming loans rose by an unprecedented 140 billion yuan ($22.6 billion) in the first quarter to 982.5 billion yuan.

"We saw a high degree of interest from our institutional investors because of the news surrounding Chinese nonperforming loans," Ben Fanger, co-founder of Shoreline Capital in Guangzhou told Bloomberg. "Many loans from the massive lending in 2009 to 2010 are coming due and are unable to be repaid. The government and the banks have decided to handle NPLs by transferring them into the market and this becomes an opportunity."

Almost exactly a year ago, Bloomberg also reported that distressed debt funds were raising cash to s......................

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