Big name managers launch distressed funds – exclusive

Oak Hill Advisors and The Carlyle Group have both began marketing global distressed funds and are each aiming to raise $2 billion.

Oak Hill Advisors (OHA) and The Carlyle Group have both began marketing distressed funds to limited partners (LPs), according to investors who have heard the pitch. Both the New York-based sub-investment grade credit specialist and the Washington, DC-headquartered alternative investment firm are targeting $2 billion for their strategies. Both are also planning to invest their funds in the US and Europe.

Oak Hill and Carlyle declined to comment.

OHA’s chief executive Glenn August had flagged plans to launch such a fund in his Capital Talk interview with PDI last year. OHA, like other firms managing and launching distressed strategies, have been trying to time their fundraising correctly, as distressed opportunities in the US still seem to be far off. For Oak Hill, the new global strategy is a successor to the OHA European Distressed Credit Fund that raised $1.35 billion in 2012 and the OHA US Distressed Credit Fund that raised $1.125 billion in 2008. With the combined global outlook, OHA is aiming for a larger fundraise.

LPs tell PDI they like OHA’s strategy and other managers that have expertise in both the US and Europe, as distressed opportunities look more attractive in Europe at the moment, but the manager will have the ability to turn the portfolio towards the US when the time comes.

Carlyle, meanwhile, has begun raising its Carlyle Strategic Partners IV fund, the fourth in a series of global distressed funds. The vehicle is targeting $2 billion, whereas its predecessor, the Carlyle Strategic Partners III fund raised $700 million. The series was started in 2004 to target debt and equity of financial distressed companies as part of Carlyle’s Special Situations & Corporate Opportunities business. The team is co-headed by Shary Moalemzadeh and Ian Jackson, who were appointed to these roles in 2013 and are based in New York and London, respectively.