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Glendon hits hard-cap on second fund

The new $2.5bn vehicle has the same delayed drawdown provision as Fund I. 

Glendon Capital Management has wrapped up a special situations fund at $2.5 billion, an amount that exceeds the firms $1.8 billion assets under management figure from the end of 2016.

The Santa Monica, California-based firm held a final close on Glendon Opportunities Fund II, exceeding its $2 billion goal and hitting the vehicles hard-cap. Fund II has a delayed-draw structure with a three-year activation, founding partner Holly Kim said in a statement. The asset managers predecessor vehicle, the 2014-vintage Fund I, raised $1.1 billion. Glendon now manages $4.3 billion in assets.

Fund II includes both distress-for-control and distress-not-for-control strategies. The vehicle will invest in an array of industries and geographies as well as up and down the capital structure, according to documents from the New Jersey Division of Investment, which committed $50 million to the just-closed vehicle.

The fund lists a 2 percent management fee on invested capital during the investment period followed by a 1.5 percent management fee during the harvest period. It charges 20 percent carried interest with an 8 percent hurdle rate, the New Jersey investor materials showed. It also adhere to a European-style waterfall, meaning the general partner will not receive carry until the limited partner recoups its contribution plus 8 percent.

Fund I carried the same fee structure, according to an investment memo from the Los Angeles City EmployeesRetirement System, which committed $20 million to the debut vehicle and doubled that amount for Fund II. No investors received a fee discount, a source familiar with the matter said.

The life for Fund II will be the same as Fund I, this person said. Both pools carry a three-year investment period with an additional optional year at Glendons discretion. This will be followed by a harvest period of four years subject to two one-year extensions at the discretion of the LP advisory committee, according to the LACERS documents.

In addition to New Jersey and LACERS, investors included the Florida State Board of Administration ( $150 million), the Los Angeles County EmployeesRetirement Association ($100 million), the Los Angeles Fire & Police Pension System ($25 million), the Ohio Police & Fire Pension Fund ($30 million), Pennsylvania State EmployeesRetirement System ($150 million) and the State of Wisconsin Investment Board ($100 million).

Prior to founding the firm in 2013, Matt Barrett, Brian Berman, Holly Kim and Eitan Malamed all previously worked in Barclays Asset Management Group on the distressed debt desk. Barrett, Berman and Kim also previously worked together at Oaktree Capital Management, also in the distressed investing group.