Castlelake holds $725m first close on ‘value’ fund

The asset-based fund has attracted nearly half of its target in about six months.

Minneapolis-based Castlelake has held a first close on its asset-based “value” fund on $725 million, nearly half of its $1.5 billion target, sources familiar with the company tell Private Debt Investor.

The fund is being raised amid stubbornly high inflation, rising interest rates and a recessionary economy. Indeed, the US Commerce Department reported today that gross domestic product fell by an annualized 1.9 percent in the second quarter, after shrinking 1.6 percent in the first quarter. Two consecutive quarters of contracting GDP are usually taken to indicate an economy that is in recession.

Castlelake declined to comment.

Castlelake VI was launched in the first quarter and will invest across real assets, specialty finance and aviation, the sources said. The fund is the latest of Castlelake’s “value” funds, which focus on assets trapped in complex, undercapitalized or dislocated situations that can be acquired at a discount to fundamental value. The fund will seek to deliver non-correlated returns through a combination of cashflows and capital gains, the sources said.

The predecessor fund, Castlelake V, closed in 2017 at its $2.4 billion hard-cap. The manager closed its fourth aviation fund, Castlelake Aviation IV Stable Yield Opportunities, at $1.6 billion in January. Castlelake, a global alternative investment manager founded in 2005 by Rory O’Neill and Evan Carruthers, has approximately $21 billion in assets under management.