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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.
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Associated Press – President Barack Obama is trying to dampen a fire he once stoked, urging a more tempered response to public furor over bonuses paid to executives of the publicly rescued insurance giant American International Group.
Obama is virtually certain to use Tuesday’s prime-time news conference to continue an effort that began over the weekend: cooling the anti-AIG ferocity, now that it threatens to undermine his efforts to bail out the nation’s deeply troubled financial sector.
Obama’s tone changed dramatically after the House voted last week for targeted taxes to take back most of the $165 million in bonuses paid to AIG executives. Many lawmakers felt Obama had encouraged their step, because he called the bonuses reckless, outrageous and unjustified.
In the White House, however, the situation seemed to be spinning out of control. Some fellow Democrats questioned the constitutionality and wisdom of the House’s action. Executives of other troubled companies signaled they would not make deals with a federal government that revises agreements after they are signed.
On Sunday, Obama told CBS’ "60 Minutes" the House’s plan to slap a special tax on the AIG executives would be unconstitutional. Borrowing a line from his Feb. 24 speech to Congress, he said he would not "govern out of anger."
Guardian Unlimited – Three "distressed debt investors" – hedge fund Polygon, restructuring specialist Oaktree and private equity firm Alchemy – have taken control of Countrywide, Britain’s biggest residential estate agent, which was bought by US private equity firm Apollo less than two years ago for about £1bn, mostly financed by debt. Together, they have taken a majority stake for one-third of the price paid by Apollo.
Distressed debt investors, which specialise in buying financial instruments relating to troubled companies at rock-bottom prices, have been saying for two years that buying debt on the "secondary market" – where company loans are traded after the original lender has sold the debt on – was too expensive. Now, they appear to be judging it the right time to move back in.
