October 15th, 2018

by Bei Hu

• Firm attracted $500 million for a new direct-lending fund
• Investors also added capital to its oldest and largest fund

OCP Asia has raised more than $700 million over the past 12 months for funds that lend to small- and medium-sized companies, according to a person familiar with the matter.

OCP’s latest fund, which is expected to close later this year, got more than the $500 million in commitments it was seeking, the person said, asking not to be identified because the details are private. The balance is for the firm’s oldest and largest fund, the person said.

Investors are casting around for alternatives to stocks and bonds amid a widespread rout. Looser covenants have increased risks in the public credit markets while equity hedge funds globally eked out an average 0.5 percent gain in the first nine months, on track for their worst year since 2011, Eurekahedge Pte data show. Investing in direct-lending funds provides diversification.

OCP was spun out of Milwaukee, Wisconsin-based Stark Investments LP in 2009 and has offices in Singapore and Hong Kong. The fresh capital increased the firm’s assets by about 50 percent to almost $2.3 billion, the person said.

The company’s Orchard Landmark Fund, a $1.6 billion open-ended hedge fund dedicated to private lending, was set up in September 2013 and has gained 7.2 percent this year through September, investor updates seen by Bloomberg News show. OCP’s Landmark II, its earlier private-equity-like fund that received $200 million of commitments, has generated an annualized 22 percent internal rate of return from an initial fundraising deadline in January 2016 through August.

OCP’s third fund began raising capital in the first quarter and is about 30 percent invested, according to the person.
All three specialize in two- to three-year loans that are secured by property or other corporate assets, co-founder Teall Edds has said. Borrowers include companies that want to finance acquisitions or expand without selling equity at a discount and diluting shareholders.

Australia accounts for more than half of OCP’s investments — banks there have been scaling back lending — and Indonesia is another major market. Among its 2017 deals was a A$60 million ($43 million) advance to Sydney engineering company Bothar Boring & Tunnelling Ltd. and a series of loans totaling A$200 million to National Plant & Equipment Ltd. Both are prepping for IPOs.