Olympus Capital Asia enters structured credit

Olympus Capital Asia has launched a structured credit business, recruiting Barclays’ Nitish Agarwal and Gary Stead from Australia’s Shearwater Capital to lead the unit.

The mid-market private equity firm has set up Olympus Capital Asia Credit (OCA Credit) to provide structured loans of $20-100 million to mid-sized companies in the region. For larger deals, it will partner with co-investors.

Olympus Capital Asia III, which closed at $750 million in 2008, has provided a “significant investment” to the platform, says the PE firm, but it would not disclose the amount. It also declined to comment on whether it would raise a structured credit fund.

Based in Singapore, OCA Credit aims to provide structured loans with two- to three-year maturities as transition capital for growing companies that cannot access bank debt or do not want to dilute equity.

It will target the markets of Southeast and North Asia, India and Australia, with a particular focus on providing medium-term capital for growth or acquisitions.

“Middle-market companies in Asia are facing a deteriorating supply environment for medium-term credit,” says Gaurav Malik, OCA's managing director. “A lot of the international banks who were active in the structured financing space are pulling back due to various constraints."

They include regulations such as Basel III and the US’s Volcker Rule, which has led banks to limit their exposure to structured loans.

“Hedge funds which used to play in the structured credit space are also pulling back from illiquid positions. They want to focus the liquid and tradable positions,” Malik tells AsianInvestor. “We see a gap, especially in the mid-market space for two or three-year financings.”

Olympus has been planning the credit platform for more than a year, he adds. The PE firm’s staff are helping the credit platform to source potential investments and perform due diligence.

Olympus plans to hire at least two or three additional dedicated staff for the credit platform over the next few months, says Malik. They will be led by Agarwal and Stead, who serve as managing directors for OCA Credit.

Agarwal previously served as managing director of Barclays’ global financing solutions business in Asia, while Stead had co-founded Sydney-based Shearwater, an Australia-focused structured credit fund.

OCA Credit has emerged as the latest provider of structured loans to mid-sized companies in Asia.

Last year, ADM Capital in Hong Kong launched a secured lending facility in partnership with International Finance Corporation to provide loans to financially stressed mid-sized Asian companies. 

And Hong Kong-based Double Haven is planning the launch of an illiquid strategy focused on private lending and distressed positions later this year.