Spice Finance, the financial services arm of the $1.5-billion BK Modi Group, has entered into a joint venture with Singapore-based 3 Degrees Asset Management to set up a special situations private equity (PE) fund to invest in distressed assets in Southeast Asia and India.
The Spice 3 Degrees Special Opportunities Fund, which will be chaired by Modi, is expected to rake in $100 million. With an initial investment commitment of $21 million from Spice and 3 Degree, the fund is expecting a final close of $100 million with the help of third party commitments.
“Spice Finance will invest Rs 500 crore in distressed assets and special situations, as well as other niche businesses such as remittances and over-the-counter exchanges. Our strategic alliance with 3 Degrees is the first significant step in our goal to achieve a $1-billion valuation for Spice Finance within the next few years,” said Divya Modi, executive director of Spice Finance. She added that while this fund was focused on the southeastern Asian market and India, a separate India fund would be launched by August-September.
The Spice 3 Degrees Special Opportunities Fund plans to invest in distressed assets, turnaround stories, recapitalisations as well as a myriad of other attractive opportunities that have become available as a result of the turmoil in the global financial markets. The investment objective is to generate long-term capital growth from a diversified portfolio of debt and private equity investments. The fund will focus on control-oriented investments, where board as well as management control can be achieved at the time of the investment. The fund will target companies whose shareholders are struggling or where the debt holders are foreclosing.
“Asia’s distressed asset market is highly inefficient, very large and growing rapidly. With over $2 trillion in opportunities and only a handful of sophisticated players, the Asian distressed asset market epitomizes the inefficiencies we seek to exploit as a firm,” said Moe Ibrahim, gounder of distressed specialist 3 Degrees.
The fund will focus on companies with long-terms growth prospects but were short-term liquidity and management issues have caused the company to fail.
3 Degrees is a leading Singapore-based investment management firm. The firm’s core disciplines in distressed debt and turnaround management have led it to be widely recognised as Asia’s pre-eminent distressed assets manager. 3 Degrees offers an array of specialized financial services to high net worth and institutional clients, including asset management, wealth management and advisory services.
