Gregory Park, managing partner at Harvest Northstone Capital, answers SCI's questions

Q: How and when did Harvest Northstone Capital become involved in the Asian structured credit market?
A: Harvest Northstone Capital is a joint venture between Northstone Peak, the fund I established in 2011, and Harvest Alternative Investment Group. Harvest Alternative Investment is a wholly owned subsidiary of Harvest Fund Management Co, the second largest fund house and the largest JV fund house in China. It is minority owned by Deutsche Asset Management (Asia).

Recognising the emergence of credit as a core asset class for its clients seeking stability, Harvest wanted to add an innovative manager with solid experience. Over the past 15 years as head of securitised products Asia for Credit Agricole, Credit Suisse and then Deutsche Bank, I was fortunate to have arranged several pioneering ABS deals in the region. I was excited to contribute my experience to the Harvest platform and in 2012 Harvest Northstone Capital was established.

Over various cycles in Asia, all of my structured credit transactions performed as expected. For example, the US$144.36m KDBC Leasing Receivables Corp 1 and €605m Korea First Mortgage No. 3 transactions from 2000 and 2004 respectively all paid off in full. The €292.8m Hsinchu International Mortgage Loan 2 deal from 2006, meanwhile, remains outstanding but performing.

Our partnership with Harvest creates synergy because the joint platform combines the relationship, compliance and legal oversight that we need as a going concern with the intellectual property the management team offers. Harvest Northstone Capital has the ambition to be a premier Asian credit player offering a high quality product to a global client base.

Q: How do you differentiate yourself from your competitors?
A: Harvest Northstone Capital is the only dedicated Asia-focused structured credit fund. Our vision is to source and structure unique, high quality Asian assets into instruments that can provide stable cashflow-generative returns for the decades to come.

Our aim is to capture the opportunity that arises from the growing imbalance between the demand from Asian SMEs, corporates and consumers for funding and the shrinking supply of credit available from banks due to capital constraints. This dislocation creates a credit vacuum and offers unique investment opportunities in a number of jurisdictions and asset classes.

There has been somewhat of a lag-effect in the region. While investors understand that Asia is the fastest growing region in the world, there has been a lack of available products for investors to evaluate.

Q: What are your key areas of focus today?
A: As yields continue to compress, there is an opportunity to fill a void where well-structured and high quality investments are in demand. There is an abundance of cash-flowing assets in Asia and a growing, highly consumptive middle class.

We are evaluating hundreds of clients throughout the region to find the best asset pools - that is our focus every day. We dive into multiple jurisdictions, cultures and languages - these are high barriers to entry that benefit our Asian platform.

Q: What is your strategy going forward?
A: We're currently marketing our Asia Investment Grade Credit Opportunity Fund I, which will invest in a diverse portfolio of privately-negotiated US dollar-denominated high grade (triple-B or above ratings) structured debt financings in Asia, as well as handling specific separate managed account mandates.

Q: What major development do you expect from the market in the future?
A: I believe alternative investments and shadow banking will become more commonplace as funds replace banks as traditional lenders. At the same time, there will be increasing demand for high quality, transparent and stable investments. Looking ahead, we hope to take advantage of the uncertainty in the global markets by promoting our expertise in the Asian structured credit markets.

CS