Cheyne scales back fund to close on €1bn

The firm’s European Strategic Value Credit Fund, targeting stressed mid-market debt, was 40% oversubscribed.

Cheyne Capital Management, the UK-based alternative asset manager, has closed an opportunistic credit fund on its hard cap of €1 billion. The fund was oversubscribed to the tune of 40 percent.

The European Strategic Value Credit Fund was launched a year ago, is managed by Cheyne chief investment officer Anthony Robertson and has an opportunistic strategy that seeks to capitalise on the accelerated sell-down of legacy mid-market corporate loans by European banks.

A statement from the firm said the fund would “seek to take advantage of increased dislocation and heightened illiquidity in sub-investment grade credit markets as the current late-stage credit cycle advances”.

A range of institutional investors came from the UK, mainland Europe, the Nordics, North America and the Middle East and included pensions, insurers, endowments, foundations and a sovereign wealth fund.

Cheyne declined to name individual investors but a public document revealed that Texas County & District Retirement System committed $100 million to the fund in October last year.

Investments from the fund will be underwritten on the basis of delivering a net IRR of 15 percent, with the overall portfolio expected to achieve a 1.5 times money multiple return.

The fund will acquire the debt of stressed mid-market businesses with average deal sizes of €10 million to €50 million. Cheyne believes this size of opportunity falls below the radar and mandate of larger distressed and special situations funds. It has already made eight investments and will hold between 25 and 30 positions in total.

Robertson, who previously headed BlueBay’s global leveraged finance group, established the Cheyne Strategic Value Credit business prior to launching the fund last year. He has built up a 12-strong team.

“With crowded positioning in large-cap situations and unattractive valuations in mainstream sub-investment grade credit markets, we believe this mid-market segment represents an attractive opportunity for those with sufficient depth of expertise and origination capability in the relevant European markets,” said Robertson.

In August last year, Cheyne hit its £600 million hard-cap for its fifth real estate credit fund. As well as real estate debt and strategic value credit, the firm is also involved in social property impact and equity-linked investing. It was founded in 2000.