Former Citigroup, Inc (NYSE: C) and Goldman Sachs Group Inc. (NYSE: GS) bankers, operating under the company Kendall Court Partners Ltd, have raised $150 million to create a mezzanine fund to meet rising demand for hybrid debt and equity financing in Southeast Asia.
The firm, based out of Singapore, manages about $400 million and is optimistic about the mezzanine market after the financial crisis led hedge funds and investment banks to withdrawal out of debt funding in the region. Mezzanine financing is debt capital which gives the lender the right to convert to an ownership or equity interest in a company.
The firm aims to provide alternative sources of financing to companies and buyout firms that want to avoid ownership dilution by selling new shares as well as firms that might have difficulty in borrowing money via the capital markets or getting bank loans.
“The recent financial crisis has changed our landscape considerably and the opportunity set is now more prevalent than it was when we started our first fund in 2004,” said Chia to Bloomberg Businessweek, a former VP of Citigroup’s Southeast Asia investment banking team.
The “The Kendall Court Mezzanine (Asia) Bristol Merit Fund LP” is the second fund focused on Southeast Asia setup by the company. The fund has already made three transactions in Indonesia and exited one of them, with a 22% return, before closing the fund on August 13th. The fund raised $50 million in its first closing in August 2008, one month before Lehman Brothers filed bankruptcy marking the beginning of the financial crisis.
