SSG’s special sits fund halfway to $300 million target

SSG Capital Management has held a second close at $160 million for its second special situations fund, with about three-quarters of the capital coming from European investors.

SSG Capital Partners II was launched in February this year with a target of $300 million and a hard cap set at $400 million. The fund, which focuses on distressed deals in Southeast Asia, India and Greater China, held a first close in March at $85 million, with most of the capital coming from the firm’s existing investors. 

The fund is expected to hold a final close before year-end. The vehicle is a follow-up to the firm’s maiden fund, which closed in 2010 and is almost fully invested, with its final deals likely to be made by mid-year.

Edwin Wong, SSG Capital managing partner and chief investment officer, said the firm is benefiting from interest in the niche aspect of special situations. 

“It’s very different from what investors typically see in Asia, where it’s mostly buyouts or growth capital. Given the macro downturn, investors are more receptive to looking at special sits as potentially a diversification from their existing portfolio," says Wong.

SSG Capital sources proprietary deals in India, Greater China and also Southeast Asia, with a focus on Indonesia.

The new fund, which has already started investing, is expected to have a portfolio of about 10 to 12 companies, with an average deal value of $30 million. The economic downturn has led to a favourable deal environment, despite greater attention on Indonesia by private equity investors, says Wong.

“There has been a lot of interest and private equity money being raised in Indonesia, but the type of deals we tend to focus on is different from what traditional PE firms look at,” notes Wong.

SSG Capital’s tactic of sourcing proprietary deals also means it does not need to engage in bidding wars with other investors, which helps to keep down valuations at the acquisition stage, he adds.

“With the downturn, the deal flow is now more robust and what we can get from a pricing and structure perspective – the terms we get from the investee company – is also more favourable,” says Wong.