41035 - DARP SPV Altus Regional Facility

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Summary of Investment Information

Project Number

41035

Company Name

ALTUS SPECIAL SITUATIONS ASIA I LP

Date SPI Disclosed

Jul 10, 2018

Country

East Asia and Pacific Region

Region

East Asia and the Pacific

Projected Board Date

Aug 10, 2018

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Oct 13, 2018

Department

Regional Industry - FIG Asia & Pac

Industry

Financial Markets

Previous Events

Approved : Sep 13, 2018
Signed : Sep 28, 2018
Invested : Oct 11, 2018

Sector

Distressed Assets SPV

Project Description

The proposed project is for IFC to set up with Altus Capital Partners Pte. Ltd. (Altus, the general partner) and another strategic investor, the DARP SPV Altus Regional Facility (AltusRF or the Fund), to invest in distressed assets (DAs) in Philippines, Thailand, Indonesia and Vietnam. The total capitalization of the AltusRF is envisioned to be up to US$272.5 million. The proposed investment is up to US$65 million comprised of US$15 million from IFC, US$25 million from the IFC Emerging Asia Fund (IFC EAF)), and US$25 million from the IFC Financial Institutions Growth Fund (FIG Fund). The rest of the capital will be raised by Altus’s founders Pavan C. Gidwani and Benjamin C. Sevilla and a potential strategic equity investor (The Project). The Project represents IFC’s continuous effort in strengthening key Southeast Asia countries’ financial system.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	15.0

Development Impact

Project-level Impact: 1) Stakeholder effect for local companies in distress: provide financing to stressed but viable companies, often highly leveraged with deteriorating earnings and limited access to bank financing, across target markets and in diversified sectors. 2) Stakeholder effect for financial institutions: enable banks and other financial institutions to reduce their exposure to distressed assets on their balance sheets and recycle capital towards new lending. Market-level Impact and Market Creation: 1) Integration: establishment of a regional cross-border platform which will increase efficiency, scale, and knowledge transfer, as compared to local DA platforms. Currently, in the largely fragmented DA market, there are only a handful of experienced DA investors at a regional level. 2) Resilience: increase access to long-term equity-type funding, support of the formalization of the DA market in the region, and attract other investors to the DA market. Through AltusRF, IFC will finance these entities to help meet their financial obligations, achieve sustainable growth and contribute to job creation and economic stability.

1) Resource Mobilization: IFC's support to Altus, a local player that is expanding regionally, is critical to Altus' ability to attract additional investors such as the FIG EAF, IFC FIG Fund, and the strategic investor, to the DA sector. 2) Financing Structure: IFC is providing long-term funding and equity capital not readily available in the market. 3) Standard Setting: IFC will help establish target countries, regions, sectors and portfolio diversification limits for eligible investments that meet IFC's E&S Sustainability.

E&S Category Rationale / Risks and Mitigation

The project will support the establishment of a regional SPV facility to acquire and service eligible distressed assets (DAs) from banks and other financial institutions. The DAs may include sub-performing/non-performing loan portfolios, sub-performing/non-performing loan single-assets including real estates and other properties, and distressed-debt special situation opportunities, but in no event direct equity investments. The overall E&S risks and impacts of the DAs are expected to be moderate. A limited number of properties may involve ongoing or unfinished construction or informal squatters, and some SME or corporate non-performing loans may still have potential E&S risks and impacts that are generally few in number, site-specific, largely reversible and can be readily addressed through mitigation measures. The Project has been therefore classified as a Category FI-2 project according to the IFC Sustainability Policy. The Project will be required to ensure the financing and serving activities supported by the facility are consistent with the requirements of the IFC FI Exclusion List, applicable national laws and, where applicable, the relevant IFC Performance Standards.

The main E&S risks and impacts of the Project derive from the E&S risks associated with the DAs acquired as well as the servicing activities to recover the non-performing loans or DAs. The servicer, Altus, under the existing IFC investment, has developed and implemented an environmental and social management system (ESMS) to screen its investments and to assess and manage the potential E&S risks associated with its servicing activities consistent with the above requirements. Altus will continue to implement the current ESMS. In addition, it will establish an external communication mechanism and will provide continuous training for its staff and contractors.

Contacts

For Inquiries About the Project, Contact

Altus Capital Partners Pte. Ltd.
Pavan C. Gidwani
CEO
+63 2 844 2551
pcg@altus.capital
15th Floor W Fifth Avenue Building, 5th Avenue, Bonifacio Global City, Taguig City 1634, Philippines
http://www.altus.capital/

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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Task Title & Description	Anticipated Completion Date
Staff Training	10/31/2018
Establish ECM	09/30/2018

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