“China’s NPL market is large and growing, and opportunities for deeply discounted investments are enticing foreign firms with NPL experience in other markets,” said Brock Silvers, managing director at Adamas Asset Management in Hong Kong.
Gaining access is one thing, but succeeding is another. Top-down run China can be an arbitrary place to do business, and local knowledge and contacts are required in the 1.4 billion person nation. Foreign firms have often grappled with unpredictable courts, fraud and challenges of soAurcing bad loans. A web of local enterprises are often closely connected to regional banks and the local government, making it hard to navigate.
The market has grown significantly. But lack of experience has been an obstacle and many firms that stuck their toe in eventually pulled back because of difficulties in working out bad loans in China’s system, according to Benjamin Fanger, a managing partner at ShoreVest Partners, a distressed debt firm.
“Some foreign investors
are still continuing to push forward to try to learn and this new agreement opening to direct deals with banks might add more interest again,” he said.