Avenue Capital Group is shutting down the hedge fund that Marc Lasry (pictured) and Sonia Gardner founded the business with and focusing on longer-term debt products.
The US hedge fund with $350 million under management, is only 3 percent of Avenue’s assets under management.
“Approximately $10 billion, or 85 percent, of the capital Avenue manages in the distressed investment space is in long-term investment vehicles with lockup provisions generally ranging between five and seven years. The longer term lock-up structure represents the principal direction of the firm,” a spokesman told PDI.
The hedge fund used to be much larger, though specific numbers were not immediately available.
Avenue is also not the only one moving in this direction. Fortress Investment Group decided to close its macro hedge funds last month, following an extended period of poor performance and redemptions. The firm has a large and well-performing credit business run by Peter Briger.
Och-Ziff Capital Management, one of the oldest and most well-known hedge fund managers, has seen its hedge funds struggle in terms of performance and outflows. The firm is now building its credit business, including separate accounts, CLOs, a new BDC and has also set up a new energy investment platform in Houston.
The hedge funds that originally founded the business at Highbridge Capital have also reduced in size and seen weaker performance. The Highbridge Principal Strategies business, the firm’s private credit arm which has successful mezzanine and senior lending strategies, is looking to spin out from Highbridge Capital, and JPMorgan, which owns Highbridge.
Claren Road Asset Management, a suite of credit hedge funds owned by The Carlyle Group, has also suffered poor performance and redemptions, while Carlyle’s Global Market Strategies private credit business has been looking to grow its BDCs and distressed debt products.
Avenue has been scaling its longer-term debt strategies. The firm closed its Avenue Energy Opportunities Fund in the summer at $1.3 billion, well over its $750 million target. The firm is also raising its Avenue Europe Special Situations Fund III, its largest European credit vehicle yet. It held a first close of $1.1 billion in the spring and expects to close at its $2 billion target soon.
Avenue was founded by Lasry and Gardner in 1995. The alternative investment firm is headquartered in New York and has offices in London, Beijing, Hong Kong, Luxembourg, Madrid, Milan, Munich, New Delhi and Singapore.