SINGAPORE Trends and Developments Contributed by: Doos Choi, Mayer Brown
rise to opportunities, the underlying economic performance in the region has been some - thing of a mixed bag, which serves as coun - terweight to the potential opportunities; • some countries in the region have suffered market shocks relating to fraud and corrup - tion. For example, the corruption scandal and trial relating to Saigon Commercial Bank in Vietnam and the ongoing fraud investigations surrounding Stark Corp in Thailand; • much of the regional economic activity and health is tethered to real estate, which has seen a sharp downturn in most Asian jurisdic - tions. Many businesses (even those that have been active outside of the real estate sector for some time) started life in, and owe much of their firepower to, real estate; • geopolitical considerations can be difficult to navigate particularly for funds which have a significant LP base outside of Asia; • for funds with a global remit, other markets such as the US may have been considered to generate more attractive risk-adjusted returns after taking into account the added complexi - ties of addressing local laws and regulations and relative uncertainty of outcome (though we hasten to add that this is often a hot topic of debate within the private credit commu - nity); • for funds that have been active in prior years, particularly in the property sector, their band - width may have been depleted with managing their existing exposures; • pure distressed strategies in the region are still uncommon. Most funds are only man - dated to invest in performing credits although some will sit at the “opportunistic” end of that spectrum; and • M&A activity in the region has been muted leading to fewer opportunities for private credit funds focused on such event-driven financings. Japan is perhaps the notable
exception but the local bank lending markets have continued to dominate there. If you widen the net to APAC and South Asia, then Australia and India have been the brighter spots in this part of the world with most oppor - tunities in those regions having been onshore in local currencies. This is not to say that investments in other mar - kets have not occurred. Switching focus to the purely domestic market in Hong Kong, the more notable private credit investments have been in residential real estate developments which have been caught in the sector’s demise. The “refi - nancing wall” faced by property developers and the difficulties they have faced in raising finance through pre-sales has perhaps been the biggest source of opportunities. The Corniche (Logan Group and KWG Group), Hopson and Grand Homm (Sutong/Goldin) come to mind. The PRC and the commercial real estate sector remain challenging for most – indeed, we are seeing pri - vate credit fund managers based in both Hong Kong and Singapore petitioning for the winding up of PRC headquartered property developers and appointing receivers with respect to some legacy investments. The more notable invest - ments in Singapore itself in recent times have been in the online fintech space as the regional economies look to digitise. Looking further afield, the well-publicised strug - gles of some of the larger property developers in Vietnam has caught the eye of a number of private credit fund managers in the hopes that they may give rise to potential investment oppor - tunities and whilst the high-profile corruption trial in the territory mentioned above has dampened investor appetite, we have seen new money investments in certain other sectors such as education.
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