Oaktree Capital Management, a Los Angeles-based distressed debt manager, became the first foreign company to set up a wholly owned unit in China under a trade accord with the U.S.
The move sets up Oaktree to expand its $6.5 billion footprint in China’s vast bad-debt market as corporate defaults mount. At the end of 2019, Chinese banks sat on 2.41 trillion yuan ($345 billion) of bad loans, or 1.86% of outstanding loans, government data showed. China’s four state-owned asset-management giants resolved roughly $70 billion of nonperforming loans last year, according to PricewaterhouseCoopers.
Global vulture investors are eyeing opportunities in China as a rising number of companies struggle with defaults after years of debt-fueled business expansion. Corporate defaults across the country spiked to about $18.6 billion in 2019, up from a record $17.44 billion in 2018, according to Bloomberg data.
Oaktree Capital completed registration of Oaktree (Beijing) Investment Management Co. Feb. 14, according to a statement (link in Chinese) from Beijing’s financial regulatory department. With registered capital of $4.55 million, the Beijing-based company will engage in investment management, consultancy and asset management, according to public information.
Under a phase-one trade accord with the U.S., China agreed to allow American asset managers to apply for licenses to buy nonperforming loans directly from Chinese banks. Previously, foreign asset managers could buy Chinese distressed assets only through local bad loan companies.
Oaktree Capital Management, a Los Angeles-based distressed debt manager, became the first foreign company to set up a wholly owned unit in China under a trade accord with the U.S.
Oaktree Capital completed registration of Oaktree (Beijing) Investment Management Co. Feb. 14, according to a statement (link in Chinese) from Beijing’s financial regulatory department. With registered capital of $4.55 million, the Beijing-based company will engage in investment management, consultancy and asset management, according to public information.
