Exclusive: Angelo, Gordon DL fundraise off to a slow start

The firm has a $500 million target for its maiden direct lending fund and has so far had a tough time raising money.  

Alternative investment firm Angelo, Gordon & Co. is in the process of raising money for its first direct lending fund, the AG Direct Lending Fund, and is targeting $500 million. It has so far held a first close on $200 million of equity, according to a source familiar with the matter.

According to an SEC filing on 27 March, the firm had raised $103.6 million. The fund plans to use some leverage to close the fund at a total of $1 billion, a source familiar with the fund told PDI.

Sources said the vehicle’s fundraising has been slower and smaller than the firm expected because Trevor Clark (pictured) and Chris Williams, who were hired in September to lead the new initiative, left their previous positions under a cloud. The duo previously ran the lending business at Chicago-based Madison Capital Funding and it was widely reported that they were let go from those jobs by parent New York Life Investment Management, a New York-headquartered insurer and asset manager, in September 2013.

The two executives apparently violated company policies regarding personal investments and business activities, according to contemporary reports. The specifics of the breaches were never revealed, though published reports said the two men were dismissed amidst a company probe. At the time, Clark was replaced as chief executive by Hugh Wade, another co-founder at Madison Capital.

Institutional consultants that advise limited partners on picking private debt managers tell PDI they’ve shied away from recommending the fund to their clients because of the dismissal. When the new Angelo, Gordon direct lending team met with consultants and prospective clients last year, they said they would raise $300 million by January 2015. An Angelo, Gordon spokesman declined to comment.

Angelo Gordon has $27 billion under management across multi-strategy hedge funds, private equity funds, distressed credit and real estate debt and equity. The New York-headquartered firm has historically been successful in raising large chunks of money for its other funds. The California State Teachers’ Retirement System, the second largest public pension fund in the US, has invested in each of the fourth, fifth, sixth and seventh AG Capital Recovery Partners funds, a distressed credit series.