IFC injects $65 M in firm investing in distressed companies in Asia

The International Finance Corp. (IFC), through two of its funds, is investing $65 million in a firm which is, in turn, investing in financially distressed businesses in emerging markets in East Asia to rebuild their operations and credit worthiness.

Restoring the viability of these companies is seen as a way to preserve jobs that would otherwise be lost to closure, contributing to the attainment of sustainable growth in the region.

The sister organization of the World Bank announced yesterday that resources from two funds managed by the IFC Asset Management Company (AMC) — IFC Financial Institutions Growth Fund and the IFC Emerging Asia Fund — would be pooled with its own resources to make the investment in Altus Special Situations Asia 1 LP.

The infusion would enable Altus to set up a regional facility to invest in the Philippines, Thailand, Indonesia, and Vietnam to help distressed firms meet their financial obligations and regain creditworthiness.

IFC said that despite seeing strong economic growth, several companies in emerging East Asian economies face challenges.

In some markets, following the global financial crisis, loan defaults among highly leveraged corporations have increased, and a ballooning of non-performing loans (NPLs) has locked in banking capital. As a result, financially distressed companies are unable to obtain credit to restore viability and rebuild their operations.

Through its global Distressed Assets Recovery Program (DARP), IFC works with partners to build regional platforms across emerging markets and catalyze other institutional investors to invest in distressed assets.

“I am excited to embark on this next phase of Altus Capital’s expansion with our partners at IFC, AMC and other institutional investors,” said Pavan Gidwani, Altus Capital’s CEO.

“We welcome Altus playing a dynamic role as both a hands-on investor and an asset manager within this growing region, actively assisting to unlock value in viable but underperforming middle-market companies, as well as in hard assets in need of redevelopment and repositioning. Our track record provides many documented successful turnaround stories in various sectors and markets, all with high social and development impact. We are fully committed to build upon that continuing legacy with our new fund,” he added.

Altus Special Situations Asia 1 LP would have up to $272.5 million of deployable capital. IFC, IFC Financial Institutions Growth Fund, and IFC Emerging Asia Fund would be contributing up to $15 million, $25 million, and $25 million, respectively. Altus Capital Corp. would contribute $7.5 million.