The Asian Debt Fund (ADF)

Distressed debt is normally the result of loose lending practices followed by economic weakness.  In Asia, decades of unchecked lending, followed by the 1997 Asian Financial Crisis, has resulted in the world’s largest distressed debt market.  More recently, regulatory reforms such as Basel II, IAS 39 and FASB 157 have accelerated the pace at which financial institutions normally recognize losses, creating an exceptional opportunity to buy debt at bargain prices.

ADF’s investment team has been active in the Asian distressed debt market since 1998. The team is comprised of a talented group of professionals with backgrounds in restructuring, law, accounting and risk control. This multi-cultural investment team is fluent in numerous Asian languages and well versed in the bankruptcy laws of most Asian countries. The team has successfully invested through numerous difficult markets and benefits from the Firm’s unparalleled access to proprietary deal flow.

ADF focuses on fundamentally sound companies that have defaulted as a result of over leveraging. Geographically, we target opportunities in Southeast Asia, where we believe the supply/demand imbalance is at its greatest.

ADF pursues three primary types of transactions:

Event Driven Distressed
We invest in companies experiencing financial difficulty, such as a liquidity crisis, as well as companies that have defaulted on their debt. Investments are normally made at a discount to an event, such as a recapitalization, a re-organization, a debt buy back, asset sales or some other form of repayment. Returns are generated through the realization of these value-creating events, rather than changes in valuation. Investments normally entail the purchase of defaulted, senior, secured bank debt. We do not take a contentious view to investing. Rather, we look to build long-term partnerships, generating returns through rehabilitation, not litigation.

Asset Backed Bridge Lending
We extend, on a first priority basis, Bridge and Debtor-in-Possession (DIP) loans to select companies. We believe that superior, low-risk returns can be achieved through these short-term financing activities due to their highly senior position within the capital structure. Bridge and DIP loans rank senior to existing debt obligations, pay high rates of interest, pay attractive fees, are secured, and amortize quickly. We target companies that wish to buy-back their existing debt at a discount, engage in an M&A transaction, or cannot access capital markets via a debt offering.

Control Investing
From time to time, superior returns may be achieved by: 1) acquiring a controlling position in a company’s debt obligations; or 2) converting an existing debt position into a majority of a company’s reorganized equity. We do not compete in competitive private equity auctions; rather, we focus on companies in liquidation or receivership where there are significant management and capital issues. Our investments are always secured and we seek to invest at prices below liquidation value.

Learn more about The Asian Debt Fund >

FUND INFORMATION
Investment Focus	Asia ex-Japan Distressed Debt (including Australia)
Assets Under Management	$380 million
Target Annualized Return	15%
Fund Inception Date	January 2004
Fund Domicile	Cayman Islands
Investment Manager	ADF Management Ltd
Investment Advisor	3 Degrees Asset Management Pte Ltd
Auditor	Ernst & Young
Administrator and Custodian	HSBC Institutional Trust Services (Asia) Ltd
Legal Advisor	Maples & Calder

INVESTMENT TERMS	Class A	Class B	Class C
Minimum Subscription	USD 1 million	USD 1 million	USD 1 million
Annual Management Fee	1.5%	1.5%	1.5%
Annual Performance Fee	20%	20%	20%
Hurdle Rate	8%	None	None
High Watermark	Yes	Yes	Yes
Subscription Frequency	Monthly	Monthly	Monthly
Redemption Frequency	Monthly (90-day payout)	Monthly (90-day payout)	Monthly (90-day payout)
Notice Period	14 business days	14 business days	14 business days
Gate	10%	10%	10%
Initial Lock-Up	None	None	1-year
Open or Closed	Hard Closed	Hard Closed	Open

*Only Class C is currently open to new investors

Risk Disclosures >