Private Debt Investor

October 16th, 2018

by Adalla Kim

OCP Asia, the Hong Kong-based credit fund manager, has garnered $500 million so far for its latest closed-end fund vehicle, Dan Simmons, a partner at the firm, has confirmed to Private Debt Investor.

The capital raised for Orchard Landmark III is double that of its predecessor vehicle, Orchard Landmark II, which closed on $200 million in March last year, according to PDI data.

Orchard Landmark III, which has a five-year investment period, was launched in the first quarter this year with an initial target of $500 million, as per PDI reporting. The firm is aiming for a final close by year-end. The hard-cap size is unclear.

Orchard Landmark III’s investor base includes the US pension fund Montana Board of Investments, which revealed its $75 million allocation in a public disclosure in March. It previously committed $30 million to Orchard Landmark II.

Capital from the fund is being invested in corporate direct lending investments across Asia-Pacific. PDI understands OCP Asia’s typical borrowers are small and medium-sized corporates with EBITDA of $25 million-$125 million. The firm also seeks companies backed by sponsor groups or families.

In terms of geographic focus, Australia has received the largest allocation across all funds in the Landmark series, with more than 50 percent of the overall investment portfolio deployed in the country. Within South-East Asia, Indonesia is a key investment market for the funds, Simmons said.

“At present, we see more attractive opportunities in both Australia and South-East Asia, with only a modest exposure to China. However, we continue to monitor the Chinese market, particularly as a number of Chinese conglomerates unwind offshore acquisitions,” he added.

Simmons declined to disclose the investment return target for Orchard Landmark III. The firm had set a target return rate of 20-22 percent per annum for its predecessor.

Since 2016, there have been growing instances of managers pursuing a direct lending strategy in Asia-Pacific. According to PDI data, SSG Capital Management, a Hong Kong-headquartered investment firm, manages $1.14 billion across two direct lending funds; SSG Secured Lending Opportunities I and II. Avenue Capital Group, a direct lender based in New York, also reached a final closing for its Avenue Asia Special Situations Fund V at $450 million in July.

OCP Asia had $2.25 billion in assets under management as of end-September.