Sun Hung Kai and Paulson & Co. To Invest in Distressed Financial Cos.

(Reuters) – Sun Hung Kai Financial (0086.HK) on Friday said it was launching a $100 million fund that will partner with Paulson & Co and its distressed asset investment fund that focuses on financial companies.

Sun Hung Kai said Paulson, run by legendary investor John Paulson who made billions of dollars betting against the U.S. housing market, would act as the fund’s investment manager.

Sun Hung Kai’s $100 million offshore fund will only be open to professional investors and will feed into Paulson’s existing “recovery fund” as its known, which invests in distressed financial assets. That fund raised $750 million last year.

Together, the funds will invest across the globe, but are focused mainly on the United States for now.

“There is a lot of turmoil in the U.S., which is Paulson’s home market. They’ve been looking at a approximately 100 financial institutions who they think are going to be the survivors and the failures,” said Rizal Wijono, Managing Director at SHK Fund Management Limited, the group’s asset management business.

The fund will also invest in Canada and Europe, he said.

“To date, they’re looking into Asia, but they haven’t identified potential positions yet. If you’re looking for maximum appreciation, the obvious place is the developed world,” Wijono said.

Sun Hung Kai has worked with Paulson since 2004, which has acted as investment manager of an SHK corporate arbitrage manager fund. That fund returned 103 percent to investors in 2007, and 19 percent in 2008, Wijono said.

Wijono said that Paulson appears ready to start going long into companies that are emerging as winners in financial industry.

Paulson has approximately $29 billion in assets under management with offices in New York, London and Hong Kong.

Sun Hung Kai Financial is one of Hong Kong’s largest, non-bank financial institutions, with more than HK$50 billion ($6.45 billion) in assets under management.

By Michael Flaherty
(Editing by Jonathan Hopfner)