ADM Capital, a Hong Kong and London-based private credit investment manager, has held the final close for its Asia Secured Lending Facility II, (ASLF II) with proceeds raised of USD178 million.
ASLF II received USD50 million and USD10 million in commitments, respectively, from the Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution, and Calvert Impact Capital.
IFC, a member of the World Bank Group, alongside another investor, provided initial seed capital in 2016 and the Facility – also known as the Somei Lending Platform – has already made seven investments since its first close in September 2017.
ADM Capital manages more than USD1.6 billion in private market assets. In Asia, ADM Capital has a variety of structures, which seek to support growing Asian businesses and provide credit in markets where its availability is scarce. The Facility succeeds ASLF I, launched in 2012 in partnership with the IFC. The strong performance of ASLF I has seen IFC and another seed investor re-invest in ASLF II. Capital from the new Facility will be used to make bi-lateral, direct loans to small and medium-size enterprises (SMEs) across the region with equity participation and profit-sharing mechanisms used to enhance returns. The Facility will provide credit allowing SMEs to grow in the absence of bank financing, subsequently saving jobs and securing livelihoods.
“We are delighted to partner with two additional leading development finance institutions that share our commitment to sustainably advancing Asian emerging economies,” says Christopher Botsford (pictured), co-founding Partner at ADM Capital. “Our long-term capital supports growth and allows borrowers to operate through periodic business fluctuations, while providing attractive risk-adjusted returns to investors.”
“At IFC, one of our key areas of focus is SMEs,” says Vivek Pathak, IFC Director for East Asia & the Pacific. “We reiterate our support for this Facility, which succeeds Asia Secured Lending Facility I, to support small businesses, which drive economic growth and create between 70 and 95 per cent of new employment opportunities in the emerging economies across the region.
“While access to capital continues to be one of the toughest challenges, we hope to reach out to the sector more effectively and efficiently through our continued partnership with ADM Capital.”
Founded in 1998, ADM Capital recently marked its 20th anniversary as a leader in Asian credit. During the current year, it has originated more than USD850 million in secured private credit loans. In October, 2018 ADM Capital closed the Cibus Fund, a USD450 million private equity and co-investment vehicle created to invest in sustainable, rapidly-growing food chain companies. ADM Capital has strong Pan-Asia sourcing capabilities and structuring expertise across jurisdictions, allowing the deployment of capital across countries and sectors in the region. Typically, borrowers are performing entities that are unable to obtain financing from traditional channels. ADM Capital brings a set of environmental, social and governance principles to its lending and, through active engagement, works to mitigate risk and improve codes of conduct in portfolio companies.
The ASLF II has an innovative structure in which investor participation is structured in the form of a syndicated loan platform with a revolving senior tranche plus a junior tranche. This allows capital to be recycled throughout a six-year availability period. Given the low default ratio and the high cash yield of the ADM Capital loan portfolio, the Facility received an investment grade credit rating (BBB+) from Egan Jones, a Nationally Recognized Statistical Rating Organization in the United States (NRSRO), which is recognized by the US National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider.
