"Insolvent companies are trading at a premium"

By Shrija Agrawal (VCCircle.com)

Halcyon is raising a maiden $200 mn distressed assets fund and expects a first close of $100 mn by March 2010.

Narayan K Seshadri, chairman and CEO, Halcyon Resources and Management Pvt Ltd, believes in putting his faith in distressed assets. Halcyon, established in 2004, started as a workout group to build valuable businesses by turning around or turning up the performance of stressed assets. The man, who is credited with turning around KPMG Consulting in India, is on the road to raise a maiden $200-million distressed assets specialist fund. In an interview with VCCircle, Seshadri talks about fund-raising, investment strategy, sector focus and the distressed investing scene in India.Excerpts:-

What made you think of setting up a turnaround fund?

Initially, my partners and I invested our money to turn around assets. We made some very good returns too. In 2006, we were asked by a lot of people to manage their money. We partnered with US-based hedge fund investor Baupost Group LLC, which believed in value investing. But, after the market meltdown, their focus shifted to the debt market. So, we decided to form a fund with multiple investors.

What is the fund size that you are targeting?

Our fund comprises two components, an onshore component of a $100 million and an offshore commitment of $100 million.