Shoreline Capital said Wednesday it closed its third fund at US$500 million. Investors include government and private pensions, followed by endowments, foundations, insurance companies, family offices and high-net-worth individuals. Shoreline said its overflow fund, which had initial $115 million close on June 1, will likely be oversubscribed within the month. Shoreline, of Guangzhou, China, focuses on illiquid credit-related opportunities such as non-performing loan portfolios, distressed special situations and non-distressed special situation investments.
Shoreline Capital Closes Oversubscribed $500 Million Fund III
– The firm also closed over $100 million for an overflow fund focused on the new NPL wave
Guangzhou, China – June 10, 2015 – Shoreline Capital, one of the most established private fund managers in Chinese distressed debt and special situation investments, has closed its third fund at US$500 million. The fund, Shoreline China Value III, was over-subscribed. Meanwhile, Shoreline held the first close for Fund III’s overflow fund at $115 million. Based on current indications of interest, Shoreline expects the overflow fund to also be oversubscribed within the month.
Since the firm’s inception in 2004, Shoreline has focused on illiquid credit-related opportunities arising from the inefficiencies in China’s financial system. Such opportunities include (i) non-performing loan (“NPL”) portfolios; (ii) distressed special situations; and (iii) non-distressed special situation investments. Shoreline has built a track record of successfully investing across these three categories of credit opportunities.
At time of Shoreline Fund III’s final close, around half of the $500 million had already been invested in several transactions, with almost 1,000 non-performing loans in the portfolio. Its investment committee is making decisions on a number of other deals.
Commenting on the market condition, Mr. Benjamin Fanger, Co-Founder & Managing Partner of Shoreline Capital, attributed the surge of large NPL deals to both the market-oriented development of Chinese banks and the reform-minded Chinese government: “The build-up of NPLs from the lending boom between 2009 and 2011 was unprecedented. When growth started to slow and those loans came due, NPLs surfaced. Encouraged by the government and banking regulations, Chinese banks have started transferring NPLs in large quantities. The speed at which Fund III is being deployed is due to this new wave of NPLs.”
The investment opportunity prompted Shoreline to raise an overflow fund. “Faced with more opportunities than we could reasonably fit into a $500 million fund, we went back to our investors and gave them the opportunity to increase their allocation. We expect first to final close on the overflow fund to take less than one month,” said Mr. Fanger.
The overflow fund had its initial closing at $115 million on June 1, 2015.
The new fund, Shoreline China Value III, and the overflow fund received commitments from a broad investor base across the U.S., Canada, Europe and Asia. Its largest investors are government and private pensions, followed by endowments, foundations, insurance companies, family offices and high-net-worth individuals. “We are very grateful that several endowments and foundations have been supportive since Fund I. We also welcomed many new investors into Fund III,” said Mr. Fanger.
Mr. Fanger elaborated on how China’s current market environment is conducive to Shoreline’s investment strategies beyond NPLs: “In addition to NPLs, the slowing economic growth has generated distressed special situations opportunities where companies need to weather difficult times. Shoreline is probably the only fund manager that has over a decade of experience specializing in both NPLs and special situations in China.”
About Shoreline Capital Management, Ltd:
Shoreline Capital is a private fund manager founded in 2004 to specialize in finding and creating value in distressed debt and special situation investments in China. The firm has over 30 professionals in China and manages close to $1 billion of capital in portfolios of non-performing loans, restructured single credits, and special situation financings. Prior to 2008, Shoreline Capital sourced and serviced over US$1.6 billion (principal balance) of Chinese non-performing loans in one-off deals for third party investors. It closed its first discretionary fund at US$178.2 million in 2008 with an investor base of primarily endowments, funds-of-funds, pensions and foundations. Shoreline’s second fund closed at $303 million in February 2013 with a larger base of investors across North America, Europe, Asia and the Middle East. In 2015, Shoreline closed its third fund of $500 million and an overflow fund that is expected to be $200 million.
This press release does not constitute the offer of advisory services or offer of a security or the solicitation of an investment.