Asia-Pacific

Singapore firms buying up distressed assets

(Xinhua)
Updated: 2010-12-24 13:17

SINGAPORE - Singapore firms have been picking up distressed assets, such as property in the United States and Indonesia, in the aftermath of global financial crisis.

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The number of those expressing interest in distressed assets has almost doubled in the past year here. Recent examples of fire-sale transactions include the acquisition, announced last month, of a fabrication facility in Houston by locally listed oil and gas player Ezra Holdings at an undisclosed "distressed" price.

However, prices for these fire-sale assets are rising, and bargains are now thin on the ground as the economy rebounds.

One factor is the recent move by the US central bank to inject hundreds of billions of dollars into the economy, in what is known as quantitative easing program, local daily The Straits Times reported on Friday.

This has meant that funds and companies flush with liquidity are driving up the demand for distressed assets.

A distressed asset is held by a company trapped in a bad financial situation, which is willing to let its assets go for very low prices. The asset could include a company's debt, or physical assets such as property and equipment.

Some assets, including property and equipment, can be acquired for 25 percent to 30 percent of their original price.

Observers note that while financial conditions affect the demand and supply of distressed assets, deals are available at any point in the economic cycle as in a good economy, assets could become distressed because of poor cash flow, bad management, or both.