Hong Kong, October 26, 2006— The
International Finance Corporation, the private sector arm of the World
Bank Group, is to make a $50 million equity investment in the Avenue Asia
Special Situations Fund IV, L.P. The fund will contribute to the disposal
or restructuring of nonperforming assets by focusing on individual assets
and asset pools. IFC’s investment is part of ongoing support of workout
models for distressed assets in emerging markets. While preservation of
jobs and capital is the ultimate goal, the fund will help improve the balance
sheet of banks by providing another venue to dispose of their NPLs, a significant
and growing burden on their capital adequacy. This will help banks
cater better to the needs of their creditworthy clients. The fund
will also use innovative financial restructuring techniques to help restore
over-leveraged companies to sound financial health as well as provide them
with better access to international investors. This should help the
companies lower funding costs, extend debt maturities, or both.
The fund is expected to invest mainly in China and India. It will
invest to a lesser extent in other Asian markets, including Indonesia,
the Philippines, and Thailand.
The fund will target nonperforming debt or debt-related securities of companies
in financial distress. Investments will involve companies that are in liquidation,
reorganization, or bankruptcy, as well as those that are undervalued due
to poor economic conditions or extraordinary events. It will also focus
on industries that are in turmoil. Avenue Asia employs an in-house due
diligence approach as part of its investment strategy.
"IFC’s participation in the fund reinforces our commitment to distressed
debt as an asset class in the region and our support of Avenue Asia as
a top-tier dedicated manager of such assets," said Richard Ranken,
IFC’s Director for East Asia and the Pacific.
Haydee Celaya, IFC’s Director for Private Equity and Investment Funds,
added, " With our ability to leverage individual transactions as well
as exercise co-investment rights and participate directly in the equity
tranche of distressed companies, IFC will be able to play a much more active
role in the workout process. This will assist in creating a strong
"Our hopes are that Avenue Asia's investment strategy will further
IFC's mission of promoting sustainable private sector investment in developing
countries. We look forward to building on this relationship and realizing
our shared goals in the years to come," said Marc Lasry, co-founder
and Managing Partner of Avenue Capital Group.
The International Finance Corporation, the private sector arm of the World
Bank Group, is the largest multilateral provider of financing for private
enterprise in developing countries. IFC finances private sector investments,
mobilizes capital in international financial markets, facilitates trade,
helps clients improves social and environmental sustainability, and provides
technical assistance and advice to businesses and governments. From
its founding in 1956 through FY06, IFC has committed more than $56 billion
of its own funds and mobilized an additional $24 billion in syndications
for 3,531 companies in 140 developing countries. With the support
of funding from donors, it has also provided more than $1 billion in technical
assistance and advisory services. For more information, visit www.ifc.org.
About Avenue Capital Group
Avenue Capital Group manages assets valued at approximately $12 billion
as of September 30, 2006. Founded in 1995, Avenue is headquartered
in New York, with offices in London, Frankfurt, Luxembourg, and has eight
offices throughout Asia. Avenue is led by its founders Marc Lasry
and Sonia E. Gardner.