Atalaya Capital Management said it held a final close for its eighth special opportunities fund at its $1.8 billion hard-cap.
The fund, Special Opportunities Fund (ASOF VIII), was launched in November 2021, and exceeded its $1.6 billion target. It received commitments from new and existing investors, including public and corporate pensions, endowments, foundations, healthcare systems, sovereign wealth plans and high-net-worth individuals, Atalaya said in a news release.
The strategy, launched in 2006 with the founding of the New York-based investment management firm, deploys an “all-weather, opportunistic approach” and invests primarily by opportunistically purchasing credits or assets from sellers in need of liquidity and providing credit-oriented capital solutions with a focus on asset-based opportunities, the firm said.
The predecessor fund, ASOF VII, closed in November 2019 and has achieved an internal rate of return of 14.5 percent, according to Private Debt Investor performance data sourced from the Florida Retirement System Trust Fund.
“The current opportunity is as attractive as we have seen in many years,” Ivan Zinn, Atalaya’s founder and chief investment officer, said in the statement. He said the firm’s team “has built the right relationships and foundation to capitalise on the market volatility and increased premium for ASOF’s capital”.
In an interview with PDI, Zinn said that “this is the type of market when we get excited”, given the volatility in the public markets and the relative lack of capital. Zinn said the firm was focused more on asset-backed or asset-based investments in areas such as consumer or specialty finance and small business where Atalaya has long been successful. In particular, Zinn said the firm was “very focused” on private asset-backed opportunities. With the volatility in the public securitisation markets, Zinn said many borrowers view Atalaya as a stable source of capital, and in such uncertain times, companies are more willing to pay a premium to access it.
In general, Zinn said that capital formation for many participants would be more challenging this year, and there will be fewer investment dollars to be allocated. But he noted that Atalaya was able to avoid the bulk of the headwinds of 2022 partly because of its differentiated strategy and partly because investors committed most of the capital for ASOFVIII in the first half.
As for the economic outlook, Zinn said the firm doesn’t see anything particularly concerning, given the still strong consumer demand. Atalaya Capital Management is a privately held, SEC-registered, alternative investment advisory firm that focuses primarily on making private credit and special situation investments in three principal asset classes: specialty finance, real estate and corporate. It has more than $9.5 billion in assets under management and has deployed more than $16 billion across more than 600 investments since its 2006 founding.