West Palm Beach (HedgeCo.net) – Spice Finance, the financial services arm of the $1.5 billion B. K. Modi Group, has entered into a first-of-its-kind strategic joint venture with Singapore-based 3 Degrees Asset Management to launch the Spice 3 Degrees Special Opportunities Fund.

Chaired by turnaround management specialist, Dr Divya Modi, Executive Director of Spice Finance, the fund will hold a first closing of $21 million comprised of commitments from Spice and 3 Degrees. A final closing will be held once third party commitments reach $100 million.

“Spice Finance will invest Rs. 500 crore ($100 million) in distressed assets and special situations, as well as other niche businesses such as remittances and over-the-counter exchanges," said Modi. "Our strategic alliance with 3 Degrees is the first significant step in our goal to achieve a $1 billion valuation for Spice Finance within the next few years,”

The new fund will invest in distressed assets and special situations spanning India and Southeast Asia. “Asia’s distressed asset market is highly inefficient, very large and growing rapidly,” said Moe Ibrahim, Founder of distressed specialist 3 Degrees. “With over $2 trillion in opportunities and only a handful of sophisticated players, the Asian distressed asset market epitomizes the inefficiencies we seek to exploit as a firm. Although the market is enormous, competition is negligible due to the relationship intensive nature of the opportunity set.”

The fund will target companies whose shareholders are struggling or where the debt holders are foreclosing. “We will focus on companies with excellent long-term growth prospects, but where short-term liquidity and management issues have caused the company to fail. Spice has a 30 years rich history of using technology and training in turning around troubled companies. We have the business acumen and resources to make companies successful,” said Modi.

Tags: asset market, business acumen, debt holders, distressed assets, divya, financial services arm, growth-prospects, intensive nature, management-specialist, modi group, niche-businesses, opportunities fund, remittances, rsquo, southeast asia, special situations, term liquidity, troubled companies, turnaround management, west palm beach

BusinessWeek – In early 2008, Jim Gee hit an impasse. Over the previous five years, Gee had been expanding Trinity Communications, a small cable-TV company in Marion County, Tenn., that he founded in 2003. With startup costs of nearly $3 million, Gee had used personal funds to get the business rolling, laying fiber optic cables across two rural towns and attracting new subscribers. By 2008 he had 600 customers and 6 employees, but Gee couldn’t find additional funds to service new towns and sign new subscribers.

"Local lending was just not available," says Gee. After he exhausted possibilities at traditional lenders, his attorney recommended that he reach out to a hedge fund that had recently started providing asset-based loans to small companies. So Gee met with Genesis Merchant Partners, a fund launched by the $145 million, Connecticut-based hedge fund Sands Brothers Asset Management. Within two weeks of the meeting, Gee had secured a 15-month, $500,000 loan from Genesis, carrying an interest rate of over 14% after fees, with a 10% penalty if he were to pay it off early. Trinity has nearly tripled its subscriber base since it secured the loan, says Gee. His company is now taking out a second loan for a similar amount from Genesis to continue its growth plan. He doesn’t consider the terms particularly onerous: "I was open to go as high as 15%."

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Tags: bad-news, depressed-prices, new-york-mercantile, niche-businesses, premises, sands-brothers, subsidiaries, trying-to-find-a-way