The vultures are flying east. From Kohlberg Kravis Roberts, which recently announced plans to set up shop in Hong Kong, to Apollo Management and US financier Wilbur Ross, it seems China is at the forefront of many distressed debt investors’ minds, writes Pan Kwan Yuk.
You cannot blame the so-called vulture funds. With China’s economic growth tailing off, the view is that companies which have over-leveraged themselves during the boom years are going to start to drop. But feasting on the carrion is likely to be easier said than done.
“Being a distressed debt investor in China is not as straightforward as in Europe or the US, simply because China does not have a clear rule of law,” Robert Partridge, Ernst & Young’s head of transaction advisory services, told beyondbrics. “Distressed debt investing is all about legal certainty and being able to take control of companies and their assets through the courts.”