ANG SAN MEI. HONG KONG. IFC, a member of the World Bank Group, and ADM Capital, a leading investor in stressed companies in Asia and Europe, have launched a repeat lending platform to support sound, but financially stressed companies in Asia. The platform will act as a safety net allowing small and medium enterprises (SMEs) to grow in the absence of bank financing, subsequently saving jobs and securing livelihoods.
The ADM Capital Somei Lending Platform addresses a credit vacuum in Asia whereby stressed, small and middle market firms that operate in dysfunctional markets or in special situations gain access to medium-term debt financing that cannot be obtained through traditional sources.
Typically, in these situations, equity valuations tend to be highly discounted, so shareholders are unwilling to be diluted. At the same time, companies in special situations or stressed scenarios face lending constraints and urgently need funding to continue operations. The Somei Platform will fill the gap by providing long-term financing to companies in need while offering its lenders limited downside via over-collateralized positions and modest upside through profit sharing.
“Banking systems are at capacity, and constrained by regulation in an environment that is witnessing an ongoing need for cross border and specialist financing, resulting in a collapse of funding options for small and mid-sized companies,” said Christopher Botsford, Joint Chief Investment Officer of ADM Capital. “IFC and ADM Capital will help such companies by making longer term loan financing available to help tide over their periods of stress, simultaneously helping them achieve stronger and more sustainable environmental, social and governance (ESG) codes of conduct.”
“While Asia has been somewhat less affected by recent financial crises, small and mid-sizecompanies critical to Asia’s economies suffer the most from a dearth of financing,” said Marcos Brujis, IFC Director of Financial Institutions Group. “Through this platform, IFC and ADM Capital will continue to support viable businesses to save jobs, protect employees, and increase welfare among communities.”
“At IFC, we have made it a priority to support small and medium enterprises to facilitate growth, generate jobs and to build strong economies. This is especially pertinent in developing countries and emerging markets,” said Vivek Pathak, IFC Director for East Asia & the Pacific. “I am very pleased to partner with ADM Capital on this much needed regional platform.”
IFC, and another financial institution, have each committed seed capital of US$50 million to the Somei Platform.
The Somei Platform builds on the successful track record of the existing ADM Asia Secured Lending Facility, which is nearing maturity and full capacity utilization. The Somei Platform allows ADM Capital to continue providing niche, longer tenured financing and will make similar investments in companies with their primary operations in Asia; including Cambodia, China, Indonesia, Mongolia, Myanmar, The Philippines, Thailand and Vietnam.Individual loans are expected to range from US$10 million to $15 million with maturities of up to three to five years. ADM Capital brings a set of environmental, social, and governance principles to its lending that reflect IFC’s Performance Standards for Environmental and Social Sustainability. The ADM Capital Foundation, which offers strategic funding to local organisations stimulating social and environmental development throughout Asia, recently celebrated its 10th Anniversary.
The Somei Platform 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 and principal repayment to investors after eight years. It targets an eventual size of up to US$200 million.
IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence, to create opportunity where it’s needed most. In FY15, our long-term investments in developing countries rose to nearly US$18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
[one_fourth]About ADM Capital[/one_fourth]
ADM Capital is a global investment manager with US$1.2 billion assets under management as of March 31, 2016. Founded in 1998 in the aftermath of the Asian Financial Crisis, the firm has over 18 years of emerging market investment experience, resulting in a deep local knowledge and strong proprietary sourcing network. ADM Capital has seven offices in Hong Kong, Mumbai, Moscow, Istanbul, London, Almaty and Kiev.
ADM Capital seeks to achieve long-term capital appreciation by focusing on rehabilitating operationally strong but financially stressed companies via restructuring, rescheduling, refinancing, debt-equity swaps, and liquidity management, and will also fund growth opportunities where alternative sources of capital are not available. For more information, visit www.admcapital.com.