Shoreline Capital, a private fund manager in Chinese distressed debt and special situation investments, has closed its third fund at USUSD500 million. The fund, Shoreline China Value III, was over-subscribed.
Meanwhile, Shoreline held the first close for Fund IIIÂ’s overflow fund at USD115 million. Based on current indications of interest, Shoreline expects the overflow fund to also be oversubscribed within the month.
Since the firmÂ’s inception in 2004, Shoreline has focused on illiquid credit-related opportunities arising from the inefficiencies in China’Â’s financial system. Such opportunities include (i) non-performing loan (“NPL”) portfolios; (ii) distressed special situations; and (iii) non-distressed special situation investments. Shoreline has built a track record of successfully investing across these three categories of credit opportunities.
At time of Shoreline Fund IIIÂ’s final close, around half of the USD500 million had already been invested in several transactions, with almost 1,000 non-performing loans in the portfolio. Its investment committee is making decisions on a number of other deals.
Benjamin Fanger, Co-Founder & Managing Partner of Shoreline Capital, says: ““The build-up of NPLs from the lending boom between 2009 and 2011 was unprecedented. When growth started to slow and those loans came due, NPLs surfaced. Encouraged by the government and banking regulations, Chinese banks have started transferring NPLs in large quantities. The speed at which Fund III is being deployed is due to this new wave of NPLs.”
“The investment opportunity prompted Shoreline to raise an overflow fund. “Faced with more opportunities than we could reasonably fit into a USD500 million fund, we went back to our investors and gave them the opportunity to increase their allocation. We expect first to final close on the overflow fund to take less than one month.
“The new fund, Shoreline China Value III, and the overflow fund received commitments from a broad investor base across the US, Canada, Europe and Asia. Its largest investors are government and private pensions, followed by endowments, foundations, insurance companies, family offices and high-net-worth individuals. “We are very grateful that several endowments and foundations have been supportive since Fund I. We also welcomed many new investors into Fund III,.
““In addition to NPLs, the slowing economic growth has generated distressed special situations opportunities where companies need to weather difficult times. Shoreline is probably the only fund manager that has over a decade of experience specialising in both NPLs and special situations in China.””
