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Charlemagne Capital targets $50m fund for Argentine distressed opportunities

Specialist investment manager Charlemagne Capital is planning its first foray into Latin America by raising a $50m fund to invest in distressed opportunities in the Argentine banking and financial services sector.

The firm is confident its experience in restructuring banks in similar situations in Eastern Europe will make a strong proposition to prospective investors.

The Argentine economy went into freefall earlier this year following the collapse of its long-embattled currency peg with the US dollar. The effect has been to amplify the debt burden of its corporate base massively and create a real sense of urgency about the need for restructuring.

Charlemagne Capital said it would ‘focus its investments on companies that embrace the need for reorganisation. Companies with sound fundamental businesses and the proven ability to generate substantial and reliable revenues will be targeted'. The Argentine Recovery Fund will invest in debt and equity structures of the strongest of these distressed companies, it said.

Nicholas Edwards, one of the firm's directors, said he was ‘confident the concept is extremely attractive albeit with a higher risk/reward profile'. The debt of fundamentally sound and promising companies was trading at distressed levels, representing a good opportunity to extract real value from the major reorganisation that would take place over the medium term, he said.

Charlemagne Capital's team of private equity specialists will be supported by local investment advisor Integra Investment in the sourcing of its deals. Integra's two principals have extensive and intimate knowledge of the country's market and a strong local network. Dr Jose Luis Manzano was a former Argentine Minister of the Interior, while Arturo Rubinstein was formerly director of Latin American Corporate Development for Templeton Global Investment.

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