China Fund Boosts Distressed Asset Business as Economy Slows

(Bloomberg) -- China’s first private manager for the ultra-rich is preparing for increased opportunities to pick up assets on the cheap over the next few years, as the country’s economic slowdown pushes more companies into financial distress.

Noah Holdings Ltd., a Shanghai-based wealth manager which oversees $24.4 billion in assets, is adding to its capabilities in restructuring advisory and special situations, alongside existing business lines focused on private equity, credit and property. The company is anticipating more chances to acquire assets at a discount as the economic cycle turns.

“I see this as something that we’re going to deploy more capital to in the next two to three years,” Kenny Lam, Noah Holdings’ president, said in a phone interview Tuesday. “We’re deploying more investment in terms of people. We’re not yet systematically deploying a lot more capital.”

Among the personnel changes, Noah has hired Zhang Yong as chief risk officer for its Gopher Asset Management unit. Zhang was formerly a senior director for special situation assets at China Cinda Asset Management Co., one of the country’s so-called “bad banks” which Noah has partnered with on previous restructuring work.

Defaults have risen this year in China as the ongoing trade dispute with the U.S. results in additional tariffs on exporters and the country’s economy slows. China’s new onshore company bond defaults reached 40.5 billion yuan ($5.9 billion) in 2018, data compiled by Bloomberg show.

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