CarVal closes on $3.6bn fund, beating initial hard-cap by 20%

CarVal Investors said it held a final close on $3.6 billion for its CVI Credit Value Fund V, exceeding the initial hard-cap of $3.0 billion by 20 percent. The fund will focus on identifying distressed and credit-intensive assets within its core strategies of loan portfolios, corporate securities, structured credit and hard assets.

With the new capital, Minneapolis-based CarVal said in a news release that it is well positioned to take advantage of a robust pipeline of investment opportunities in sectors such as renewable energy, aviation and emerging markets. It added that management views its clean energy portfolio as having high credit-quality, long-duration contracted cashflows. Approximately $1 billion of the fund has been invested, and it will use a “very prudent” amount of leverage, a source close to the company said.

Lucas Detor, a managing principal of CarVal, said the firm saw opportunity “coloured by a strong recovery and low rates in developed markets and continued capital vacuums in emerging markets”. In both developed and emerging markets, he said the firm continues to see attractive value in covid-recovery sectors including aviation and hospitality. He noted that the clean energy industry also continues to be a big area of focus, with investment opportunities in the US, Europe and globally.

The fund was launched in 2019 with a target of $2.67 billion and received commitments from a wide spectrum of investors. They include both new and existing investors, from public and private pension funds, funds of funds, private banks and sovereign wealth funds from around the world, with 61 percent coming from North America, the source said. The predecessor fund raised $3 billion, exceeding its target by 50 percent, the source added.

According to the Private Debt Investor database, Florida Retirement System Trust Fund committed $350 million. Other investors include Baltimore City Fire and Police Employees’ Retirement System, City of Manchester Employees’ Contributory Retirement System, Louisiana Municipal Police Employees’ Retirement System and Marin County Employees’ Retirement Association, according to the PDI database.

CarVal is a global alternative investment manager that focuses on distressed and credit-intensive assets and market inefficiencies. Since 1987 it has navigated through ever-changing credit market cycles, opportunistically investing $128 billion in more than 5,500 transactions in 82 countries. It has approximately $10 billion in assets under management.