ADM launches new fund and restructures another

Jul 30, 2009

Hong Kong distressed/special situations manager ADM Capital will launch a new Galleus 2 fund and relaunch its ancestor Galleus 1 fund.

Hong Kong-based distressed debt/special situations manager ADM Capital is on the threshold of launching a new fund, to be known as Galleus 2, and finalising the restructuring of its Galleus Fund, to be renamed Galleus 1.

The new Galleus 2 fund will be seeded by an American institution. According to Rob Appleby, CIO at ADM Capital, that fund is due to launch at the end of August with $100 million of capital and a target size of $1 billion.

ADM Capital currently manages $2.1 billion. Its first fund, which will be renamed Galleus 1, has been undergoing a reorganisation. Investors were given the option of sticking with the new fund or getting their money back. The new fund will go forward having reduced in size from $700 million to approximately $270 million.

Galleus 1 will focus on the more liquid end of the distressed spectrum, including sovereign and high-yield instruments. At the opposite end squat ADM's Maculus funds, with longer term, private equity and structured deals. The new Galleus 2 fund will sit in the middle in risk terms. Target returns are 15% to 20% for Galleus 1, 20% to 25% for Galleus 2 and 25% plus for the Maculus funds.

Investors in the new fund will participate in segregated accounts, and ADM wil invest whatever funds are placed without those investors being part and parcel of a general pool. When it comes to redeeming, they are allowed to leave whenever they like as long as liquidity permits it. Fees for the fund will be below the 2% management fee and 20% performance fee level.

"You don't have to fish too far from the shore to find the kind of deals we want," says Appleby, speaking from his country retreat in Dorset, UK. " So we will continue to focus on our core countries of China, India, Turkey and Southeast Asia, plus we'll take a closer look at Japan and Australia."

According to him, opportunities in Australia are mitigated by the big banks warehousing potential deals, and bid/offer spreads are still quite wide. However, there are some portfolios up for sale.