Raymond Chan and Jenny Sun, both former traders at Goldman Sachs, are spearheading a new fund under Blue Mountain Bridge Capital Ltd., with the goal of raising $250 million to lend to financially distressed borrowers. The focus is on Chinese property developers like Country Garden Holdings Co. and China Evergrande (HK:3333) Group, who are currently having difficulties securing loans from traditional banks due to rising interest rates and increased delinquencies.
InvestingPro data shows that China Evergrande Group, with a market cap of 2586.53M USD, has been experiencing a significant decline in its stock price, with a 72.66% decrease year-to-date as of 2023. The group's revenue growth stands at 9.73%, however, it is suffering from weak gross profit margins of -1.74%. On the other hand, Country Garden Holdings Co., with a market cap of 218.16M USD, has been able to maintain a positive revenue growth of 5.05% and a gross profit margin of 48.14%.
Blue Mountain Bridge Capital plans to provide loans with a one-to-three-year tenure, targeting 20% returns. The fund intends to invest half of its funds in Hong Kong, while the remaining will be spread across Southeast Asia, Japan, and India. The firm anticipates a significant distressed and special situations cycle in the next two to three years and focuses on senior secured lending to borrowers possessing trophy assets that can be used as collateral.
InvestingPro Tips suggest that China Evergrande Group, despite its strong earnings, is expected to see a drop in net income this year and is trading at a low Price/Book multiple. Similarly, Country Garden Holdings Co., despite its accelerating revenue growth, operates with a significant debt burden and may have trouble making interest payments on its debt.
Chan and Sun aim to secure half of their fundraising target by the end of the year. Chan, who was formerly co-head of Oaktree Capital Management’s Asia distressed debt business, will serve as CIO of the new fund. Both Chan and Sun have extensive experience in the financial sector. Sun's career includes time at Goldman Sachs Principal Strategies and co-founding Azentus Capital Management Ltd., after the introduction of the Volcker Rule. Chan has past experience at Blackstone (NYSE:BX) Inc., Mount Kellett Capital Management LP, and was part of the Asian Special Situations Group at Goldman Sachs. The pair were colleagues under Morgan Sze during their time at Goldman Sachs.
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