Chart of the week: Private distressed closed-ended debt funds beating targets

Fund managers are continuing to raise capital ahead of an expected downturn in the US

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Private Debt Investor  reported this week that Bain Capital has now gathered $2.1 billion for its $3.5 billion distressed debt vehicle, Sankaty Credit Opportunities VI. As firms continue to raise capital for an expected downturn in the US market, PDI’s Research & Analytics team has analysed whether private distressed debt fund managers are hitting targets for closed-ended vehicles.

At Q3 2015, private distressed debt funds have raised $23.98 billion from the close of 17 vehicles. The vehicles have collectively gathered $4.71 billion of capital above the targets initially set by fund managers. Since the financial crisis, 2015 so far has the highest aggregate difference between capital raised at final close and capital targeted.

Starwood Distressed Opportunity Fund X gathered $5.58 billion at final close in February 2015. With a target of $4.5 billion, the globally-focused real estate vehicle accounts for the largest positive difference between target and actual fund size this year. The largest negative difference came from York European Distressed Credit Fund II, which had targeted $750 million but collected $534 million at final close in April.

There are 85 private distressed debt vehicles in market or coming to market as at 1 October, including Sankaty Credit Opportunities VI. The funds are targeting $68.8 billion in total and have so far gathered $19.19 billion from investors through interim closes.