- New hires Madduri and Saraf to help open Hong Kong office
- Lone Star registered companies in Hong Kong and Singapore
Lone Star Funds, the U.S. buyout firm whose 2003 purchase of a Korean bank led to a lengthy legal battle, is adding people in Asia in anticipation of investment opportunities in distressed assets, said people with knowledge of the matter.
Lone Star hired Anand Madduri from Och-Ziff Capital Management Group LLC, and Manav Saraf from Tor Investment Management (Hong Kong), according to the people and Saraf’s LinkedIn profile. They will be senior staff of a planned Hong Kong office, said the people, who asked not to be identified as the information is private.
The company, based in Dallas, incorporated a unit named Lone Star Asia-Pacific Acquisitions (Hong Kong) in the city in early October, according to a business registration document. Its directors include David Nishida, representative director of Lone Star’s Hudson Japan KK unit, and Michael Thomson, a U.S.-based Lone Star executive.
Lone Star also registered as a asset manager in Singapore in October, according to a corporate document. It recruited Chalothorn Vashirakovit from Clearwater Capital Partners as a Singapore-based employee, according to his LinkedIn profile and one of the people. Jed Repko, a spokesman for Lone Star, declined to comment, as did Madduri and Saraf. Vashirakovit didn’t reply to an e-mail and a message sent through LinkedIn.
Investors in distressed assets are renewing interest in Asia after pulling back for more attractive opportunities in the U.S. and Europe in the wake of the 2008 global financial crisis. A combination of falling market prices and weak investor sentiment have made China more appealing for such firms, distressed-debt investor Howard Marks, co-founder of Los Angeles-based Oaktree Capital Group LLC, said in October.
Since 1995, investors have committed about $60 billion to 15 Lone Star private-equity funds investing in real estate, equity, credit and other financial assets, according to its website. It finished raising $5.8 billion for its Real Estate Fund IV in April, targeting commercial real estate debt and equity investments in the Americas, Europe and Japan. In July last year, Lone Star gathered $7.2 billion for a fund targeting residential debt and corporate and consumer debt as well as financially oriented and other operating companies.
Asia to Europe
Lone Star made its name buying distressed loan portfolios and lenders in Asia starting in the late 1990s, with investments ranging from golf courses in Japan to office towers in Seoul. The firm typically focused on assets that have a real estate component. Japan was Lone Star’s biggest investment target from 1998 to the mid-2000s. Then the firm shifted its focus to Europe, after the German economy sputtered and banks that had loaned billions of dollars to rebuild the former East Germany had debt to sell. The 2008 global financial crisis spawned new distressed investments in the U.S. and Europe.
In 2002, it won an auction for bad loans with a face value of $682 million at the time, sold by Chang Hwa Commercial Bank in Taiwan. The firm currently only has a Tokyo office in Asia, which focuses on real estate.
Once the biggest foreign investor in South Korean financial assets, Lone Star sold a stake in Korea Exchange Bank to Seoul-based Hana Financial Group Inc. for 3.9 trillion won ($3.3 billion) in February 2012. The U.S. fund’s investment in the bank has been mired in entanglements with the courts and regulators. It was ordered by South Korean regulators to sell most of the stake after the firm and the former head of one of its local units were found guilty of manipulating the share price of the lender’s credit card division.
Madduri was a member of the former Morgan Stanley Asia real estate investing team hired by Och-Ziff in November 2008. He had managed an Asia special situations real estate fund for the New York-based bank. He left Och-Ziff as a managing director at the end of September, according to data posted on the website of Hong Kong’s Securities and Exchange Commission and his LinkedIn profile.
Saraf, a former member of Citadel LLC’s special situations group in Hong Kong, went on to work for Mount Kellett Capital Management. He was most recently a managing director for Tor until the end of July, according to regulatory records and his LinkedIn page. Tor, based in Hong Kong, is led by former Citadel securities unit head Patrik Edsparr and invests in credit and special situations across Asia.