Listed fund of funds Conversus Capital has seen a “substantial” increase in capital calls during the third quarter 2008 as a result of increased activity from special situations and distressed debt funds.
“Our capital calls increased substantially over prior quarters, driven by the opportunistic purchases by special situation and buyout funds of performing and distressed debt,” said the firm in its interim financial results statement.
Conversus has been upping its commitments to such vehicles since the onset of the credit crisis in 2007, and has written tickets for such funds as Oaktree Capital Management’s OCM Opportunities Fund VIIb, which closed in May on $10.9 billion, and Lone Star Fund VI, which closed on $10 billion in July.
During 2008, at least 28 percent of Conversus’ funded capital, or $57 million, was invested in distressed or performing debt.
The ability of some listed funds of funds to meet capital calls was called into question last month by analysts at JPMorgan Cazenove, as realisations slow and asset values decline.
Conversus, however, remains confident that it will be able to continue to meet calls, despite the expectation that distributions will slow further.
“We currently expect to meet capital calls on unfunded commitments with the cash flows from existing assets and through borrowings under our $650 million credit facility which is committed until July 2012,” the firm said.
Conversus, which is backed by Oak Hill Investment Management and Bank of America, debuted on Euronext in 2007 at $25 a share. At press time its shares were trading at €18.25. As of September 30 2008, the firm’s NAV had declined 6.5 percent on the previous quarter.