The board of directors of the Overseas Private Investment Corporation (Opic) has approved US$20mn in additional financing for an Asian investment fund that Opic first approved for support in 2004.
The board approved US$40mn in financing to the Clearwater Capital Partners Investments II in April 2004, at the time the fund’s initial institutional capital commitment. During the fund manager selection process, Opic placed conservative expectations on the fund’s ability to raise equity capital from institutional equity investors, with an initial target total fund capitalisation of US$100mn.
However, the fund achieved greater success than anticipated raising equity capital, validating the fund’s strategy and enabling increased support from Opic.
The fund will invest in the credits of small and medium-sized enterprises (SMEs) in Asia that are financially distressed. Through the purchase and restructuring of these credits, the fund will enable companies to improve their balance sheets and allow banks to redeploy capital in the form of new loans. The fund’s activities will also substantially enhance each target country’s financial infrastructure.
The fund will focus its investments in India, Indonesia, Malaysia, Thailand, Philippines and South Korea, with a target capitalisation of US$200mn now anticipated for the fund.
“The request for additional Opic financing for the Clearwater Capital Partners fund is a positive development, reflecting investor confidence in the entrepreneurial potential of the targeted Asian countries. It also validates Opic’s position as the initial institutional capital provider to the fund,” says Opic acting president and CEO Ross Connelly.
“This fund is unique for its focus on the SME market and local currency credits, a part of the Asian distressed debt market not served by large global firms. This fund will help support the establishment of a financial infrastructure for long-term debt markets in Asia, by creating market mechanisms that will have a positive impact on both industrial and financial sectors,” he adds.
Clearwater Capital Partners, LLC, the fund manager, is a privately-owned firm founded in 2001, with offices in New York, Hong Kong, Mumbai, Seoul and Singapore.