May 10, 2019 (China Knowledge) - Citic Capital is looking to raise USD 500 million for its first buyout fund targeting distressed assets in China, hoping to benefit from a nationwide campaign to reduce debt levels and risk.
The company currently sees numerous high-quality real estate projects with stable operating income being sold in the country as either them of their owners meet with liquidity problems amid a nationwide deleveraging campaign.
Some companies hard hit by this deleveraging campaign include Anbang Insurance, Dalian Wanda and HNA Group. HNA itself has sold more than USD 25 billion worth of assets such as land plots in Hong Kong, office towers and stakes in various businesses.
As China continues on with its deleveraging campaign, more companies are expected to undergo similar debt reduction exercises, placing premium assets that would other be not considered for selling up for sale.
Citic Capital now hopes to be able to profit from such deals, acquiring distressed assets and turning them into profitable projects.
Unlike foreign funds that typically acquire distressed assets from Chinese bad asset-managers, Citic will source for deals independently and make direct investments by purchasing stakes in these individual projects.
Citic Capital has used such investment strategies in the past. The difference this time is having a special fund dedicated to this approaching, highlighting the growing adoption of such strategies.
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