Daily News: May 22, 2014

Corporate Restructurings to Increase across Asia-Pacific

AlixPartners announced the findings of its annual experts survey and accompanying study into the outlook for corporate restructurings across Asia-Pacific. The report, “Seize the Day: An Outlook on Turnaround and Restructuring in Asia-Pacific 2014,” is based on interviews with 150 bankers, lawyers, fund managers, government officials and other restructuring experts from across the Asia-Pacific region and highlights that levels of corporate stress are expected to continue to rise across a number of countries and industries, with 70% of respondents expecting restructurings to increase in the year ahead, compared with 67% saying that in last year’s survey.

The advisory firm notes, as in last year’s survey, private equity was once again highlighted as a growing source of funding for corporate restructurings, with 93% of respondents citing it as the most-likely provider of funds. Banks operating in the region have likely seen their influence wane, according to the study, where only 38% of respondents cited banks as the likely primary funding source, down from 81% in last year’s survey.

Furthermore, respondents interviewed commented that those banks that have not already scaled back in Asia-Pacific will likely take a more cautious approach to lending into distressed situations going forward. This could leave ample room for private-equity firms to fill the void, says the accompanying AlixPartners study.

Key Findings Included:

Seventy percent of respondents believe restructurings are likely to increase over the next 12 months

Macroeconomic conditions, regulatory and political developments, and debt and liquidity issues are the top three drivers

Countries and industries expected to see the most restructuring are India followed by Japan, South Korea and Greater China; and financial services and industrial products

Ninety-three percent cite private equity as the likely funding source for restructurings 82% say ‘unrealistic expectations’ among stakeholders the most-likely cause for a restructuring to fail.

To read the full report, click here.