Insights – Key takeaways from ALB Virtual Cross-border Debt Restructuring Forum 2020
An engaging and insightful panel discussion on “Rescue and Distress Financing – Seizing Opportunities for Lenders and White Knights” at the ALB Virtual Cross-border Debt Restructuring Forum 2020 held on 3 September 2020.
DHC Capital Partner, David Chew moderated the panel discussion with panel members Justin Ferrier (Managing Director, Asian Private Credit, Blackrock), Sean Pepper (Managing Director, Tor Investment Management), Heng Cheam (Managing Director, Strategic Investment Group, Deutsche Bank), George Long (Founder and Chief Investment Officer, LIM Advisors) and Andrew Tan (Managing Director, Head of Asia Pacific Private Debt, Muzinich & Co).
Key takeaways from the panel discussion:
Current market landscape: Uptick in opportunities due to (i) banks de-risking and pulling capital out of Asian markets, (ii) the need for flexible capital ranging from senior secured debt to equity for companies facing liquidity pressures, (iii) narrowing of valuation gap and gradual acceptance of investor pricing as borrowers expectations adjust to market dislocations and (iv) whilst there are more enquires, deal closings are still limited due to the unprecedented level of government support
Secondary debt trading market: Recent surge in bank flows after an initial quiet period as banks better understand the commercial viability of troubled borrowers, sponsors behaviour and estimated recoveries in a restructuring scenario. Activity also driven by foreign capital seeking to exit. Local and regional banks cautious and in certain situations building up restructuring teams as they take a longer-term view and seek to work out non-performing loans
Private debt: The ability to move quickly and provide a tailored liquidity solution (i.e. security, covenants, and less hands-on involvement relative to private equity) is an attractive source of capital to companies seeking urgent capital or as a contingency option
Challenges faced investing in Asia: Three key areas. First, partnering with local co-investors and re-engaging with trusted sponsors with an existing relationship to overcome the lack of face to face meetings and onsite due diligence in a travel restricted environment. Second, utilising private equity style deep dive due diligence with a local panel of financial, technical and legal advisors to mitigate risks for new borrower situations. Third, shift towards higher quality assets and higher quality sponsors
“Hot spots” in 2021: Sectors: commodities, real estate and consumer led companies. Geographies: Australia, Singapore, Hong Kong, Japan and China. Distressed opportunities: Provider of super priority rescue or DIP financing to distressed companies (click here to read our “Guide to super priority rescue financing in Singapore”) or distressed M&A opportunities where performing assets are sold by distressed sellers to private equity and strategic investors
Special thanks to Asian Legal Business for hosting the virtual event.
About Asian Legal Business
Asian Legal Business (ALB) is owned by Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals. ALB is the publisher of a portfolio of leading magazine titles as well as organiser of numerous legal awards, conferences and summits within the Asia Pacific region.