Africa Special Opportunities Capital has launched ASOC Fund I, a special opportunities private equity fund focused on providing funding and turnaround services to South African companies in various states of distress.

The Fund intends to provide flexible funding in the form of post-commencement finance and other special situations financing together with significant turnaround expertise.

The Fund was co-founded by restructuring and co-investment professionals - Richard Ferguson, Shaun Collyer and Paul Birkett.

“Historically the missing piece for many business rescue processes has been a lack of funding and we’re excited to formally bring dedicated funding solutions to market in order to enhance the probability of success of business rescue and restructuring processes,” said CEO Richard Ferguson.

The Fund has committed capital of R150m with R80m available for investments.

ASOC I will invest in opportunities throughout South Africa, but have a mandate to consider investments outside of the country on a case-by-case basis.

The fund managers will look at opportunities in operation business across all industries with particular expertise in retail, financial services, manufacturing, energy and chemicals, real estate, government contracting and other service-related businesses. 

The Fund has limited interest in primary extractive mining and resources, and primary agricultural production.

ASOC I is backed by anchor investors - Conduit Capital and MMI Holdings.

Sean Riskowitz, CEO of Conduit Capital, said: “We are backing a seasoned team to form ASOC and in a difficult economy, we see ASOC as being able to invest in quality companies that need an opportunity to restructure their affairs in an orderly manner, but need the funding and skills to do so.”

Kris Adams, Portfolio Manager at Momentum Alternative Investments, added: “ Distressed investing has the potential to be negatively correlated to traditional asset classes. In addition to the excess alpha that one is able to earn from the strategy, there are a number of social benefits from saving a business from liquidation.”

Initially, the Fund will seek to invest across a range of sectors in transactions of between R30m and R50m.

However, the fund managers will consider investments outside this range together with certain pre-selected funding partners. 

“We are seeking to raise R250m for the pilot Fund I and that will permit us to do four to six transactions,” said CIO Shaun Collyer.