Axios Capital, a holding company that owns an investment bank, a securitisation company and a business consultancy based in Poços de Caldas (MG), has announced the creation of a fund aimed at negotiating debt in the rural sector based on NPLs (non-performing loans). The fund, called Axios Special Situations I, is starting with an investment of around R$70 million, but the aim is to build up an initial capital of R$200 million.

The assets, backed by rural property guarantees, will be accumulated through the interest of professional investors, individuals and companies, with average contributions of R$10 million per shareholder. Axios is counting on the financial partnership of Stark Investment Bank, based in São Paulo (SP), a digital bank with R$2.5 billion under negotiation and R$600 million in completed transactions, according to the institution.

“Our thesis is to invest in distressed debt with a high degree of asymmetry, with the possibility of buying the assets at a significant discount and with solid coverage,” says Hugo Lopes de Barros, co-founder and CEO of Axios Group. According to the Central Bank, NPLs across all sectors of the economy in Brazil currently exceed R$400 billion in overdue debt.

In its current operations, Axios allocates 70 per cent of its investments to non-performing loans and single names, with guarantees and realisable assets guarantees and realisable equity valued at 150 per cent of the amount invested – which, in its new fund, will be backed by the value of forced sales of rural properties and other assets. The other 30 per cent of investments will normally be used to acquire judicial assets in special situations, distressed real estate assets, distressed real estate assets (i.e. overdue bank loans), credit rights (i.e. overdue bank loans), credit rights, precatórios, pre-precatórios and other lawsuits of this nature, all with final judgements.

Edition and translation: Prime Yield
Original Story: Forbes Brazil
Photo: Axios