AnaCap seals £350m close for second debt fund

In a further sign that investor appetite for debt funds is growing, financial services specialist AnaCap Financial Partners has raised £350 million (€436 million; $564 million) for its second credit opportunities fund.

The fundraising comes a month after distressed debt investment specialist Oaktree Capital Management went public in the US, having earlier raised a $2.5 billion distressed debt fund to supplement its $4.5 billion 2010 offering. In Europe, Paris-headquartered private equity firm LBO France raised €200 million for its second ‘Altercap’ credit opportunities fund, holding a final close last month after less than a year on the road. Rede Partners acted as placement agent on the fundraising.

Investors, it seems, are sold on the promise of debt funds.

AnaCap Credit Opportunities Fund II met its hard cap of £350 million after just six months on the road, beating its target of £250 million, the firm said in a statement. It dwarfs the firm’s maiden debt fund, which raised £60 million in 2010.

The increase in fund size on ACOF I is a reflection of not only of rising appetite for debt funds from LPs and an increase in the level of investment opportunities, but also of AnaCap’s continued development into an institution of scale,” said Justin Sulger a partner and head of credit opportunities at AnaCap.

“We have invested a great deal of time and resource in building a first-class, dedicated credit operation. This team includes seasoned professionals who have achieved significant success investing, financing and managing credit assets. In addition, our broad network of contacts and experience in a wide spectrum of markets, credit management experience and growing reputation as a financial services specialist provides us with the essential local knowledge and flexibility to penetrate markets across Europe.”

The fund, which was oversubscribed, includes among its LPs the State of New Jersey Division of Investment, Hamilton Lane, and Ohio Public Employees’ Retirement System, AnaCap said. The fund has a three year investment period and an eight year life-span.

The fund targets performing, semi-performing and non-performing consumer and SME debt in Europe, the firm said, and has already begun investing capital.

The market for such debt is substantial, the firm believes, with financial institutions being forced to de-lever after years of over-expansion. “The pace of financial asset sales is further magnified by weak underlying economic activity and high unemployment as well as significant changes to the banking regulatory framework and the dramatic contraction of wholesale and securitisation funding”, it said in a statement.