U.S. fund managers looking to raise capital from Chinese investors will inevitably face the issue of currency conversion. In China, that’s not an easy one to tackle. Please login/register to view this content.
Securitizing nonperforming loans (NPLs) has had a limited impact on the reduction of NPLs since China re-launched a pilot securitization program two years ago, the Chinese government said in a recent report. The report identified four major issues that the pilot program faces, which China re-started in 2016 after putting it on hold following the financial crisis. Please login/register to view this content.
Last week, I spoke to Eaton Partners’ Chris Lerner about how U.S. fund managers may access Chinese investors. Given the inquires I’ve received on the topic, I caught up this week with Geoffrey Chan, a fund formation lawyer at Skadden Arps’s Hong Kong office, to get more details on ways that a U.S. private equity firm may get around China’s currency controls to raise dollar-denominated funds. Inside China, this week’s news focuses on the high leverage levels at the state-owned sector, which dominated a meeting of the Chinese cabinet, the State Council. A statement from the meeting vows to speed up cleansing of “zombie enterprises” in part by accelerating their bankruptcy restructuring and implementing the newly announced debt/equity swap rules. Speaking of cleaning up banks’ balance sheets, a pilot program re-launched two years ago that sought to securitize nonperforming loans and sell to accredited investors has had a limited impact on the reduction of bad loans, writes our reporter Jane Yi Zhang. The practice was hampered by high costs for the issuing banks and a lack of investors and trading opportunity. “Global investors and PEs are interested in the market, but the banks are cautious about selling to foreign investors worrying that they would be categorized as causing the loss of state-owned assets,” an analyst told Jane. The surging restructuring activity in China has prompted Houlihan Lokey to hire a former KPMG professional to add to its Asia team. Continuing the distressed and special situations investing theme, for next week, I have an exclusive interview with Robert Petty, co-founder and managing partner of Clearwater Capital Partners to get Rob’s view on the market. Stay tuned. As always, I encourage you to take advantage of a limited-time free trial by signing up here. To those of you already on trial, thank you and someone will be in touch shortly about subscription options. China is a huge market, and our job is to help you be a smarter, more informed investor. Thank you! Shasha Dai Founder Dai1 Media