Bloomberg The Brink - Investors Seek Hidden Gems Amid China’s Endless Property Crisis

By Edward Clark and Pearl Liu

Distressed-debt investors pride themselves on making money where others see only wreckage. China’s real estate crisis, however, has so far proved untouchable for most, with years of falling property prices, uncertainty and unwieldy restructuring processes scaring off even the most seasoned players. Now, some are beginning to spot the potential for outsize returns.

For example, a small London-based investor has just launched a strategy dedicated to Chinese property developers. Altana Wealth is still raising cash, having already brought in $10 million, to target privately-owned companies in the process of restructuring their offshore debt and swapping it into new instruments.

Altana is scouring the market for potential investments in liquid securities with a tangible underlying value higher than their current valuation and non-correlated to the performance of the broader real estate sector, portfolio manager Mathieu Scemama said.

“At the very least, we like to see a concrete restructuring proposal that can be evaluated,” his colleague Benedict Keim said. “We then participate in the restructuring in anticipation of profiting from the conversion into new instruments.”

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