CIFC expands product suite to include distressed debt

The New York-based alternative lender is looking to position itself to take advantage of the next downturn, according to the firm’s leader.

CIFC Asset Management will acquire the assets of Logen Asset Management and has hired a four-person distressed debt team from the firm, preparing itself for any potential downturn.

New York-based CIFC has made two senior appointments by bringing on Steve Gendal as head of distressed credit funds and Nick Verma as a managing director in business development. In addition, Ian Greenhaus and Abhishek Patwardhan are joining the firm as vice-presidents.

“As the credit cycle matures, we want to ensure we are well-positioned to capitalise on the attractive opportunities we believe will emerge when the downturn hits, recognizing the lead-time required to raise dedicated capital,” Steve Vaccaro, CIFC’s chief executive and chief investment officer, said in an email.

When it comes to structuring investment funds, he said the firm will set them up to suit investors, be it a drawdown fund or a hedge fund. CIFC, which will not target distress-for-control opportunities, plans to largely be active in the secondaries markets as opposed to primary issuances.

“At the present juncture, we’re focused on what’s to come – where we believe opportunities will emerge in the next 12-18 months,” Vaccaro said, adding that the firm may invest in the mid-market up to large-cap space, depending on where the “best risk-reward opportunities…emerge”.

Gendal was the founding managing partner at Logen, a special situations and distressed debt hedge fund manager which oversaw $342.7 million in assets, as of 31 December, according to the firm’s Securities and Exchange Commission public disclosure. “Logen Asset Management will continue to operate until the completion of the transition of assets to CIFC,” a CIFC representative said in an email.

Capital being raised for special situations and distressed debt has been growing in recent years, according to PDI data, with 33 percent of 2017’s total money raised locked down for those strategies. That is the highest such figure since 2012, when 44 percent of all private debt capital raised was dedicated to special situations and distressed investing.

Earlier this year, GSO Capital Partners closed one of the largest distressed funds in recent years: its $7.12 billion GSO Capital Solutions Fund III.

Some of the largest funds in market are targeting financially troubled companies. 3G Capital is targeting $10 billion for 3G Special Situations Fund V. Lone Star Funds is looking to raise $6 billion for Lone Star Fund XI, while TPG Sixth Street Partners is seeking $4 billion for TAO Contingent fund to invest alongside TAO 4.0. For the Contingent fund to be deployed, there must be a market dislocation.