Gramercy triples size of latest EM distressed fund

The Greenwich, Connecticut-based firm's fund, which has a broad geographical mandate, has made over a dozen investments already.

Gramercy Funds Management has locked down almost $1 billion for its third fund targeting distressed debt opportunities in emerging markets, a vehicle which has already called half of its capital.

The Greenwich, Connecticut-based investment shop said in a statement on Friday it closed Gramercy Distressed Opportunity Fund (GDOF) III. Private Debt Investorexclusively reported in September 2015 that Gramercy was seeking capital for the fund and that it had raised $500 million. The fund’s target was $1 billion and carried a $1.2 billion hard-cap.

GDOF III is the successor to the GDOF II vehicle that closed in 2013. Fund III more than tripled the $305 million received for Fund II, according to the release. David Herzberg, a firm portfolio manager and head of credit research, said the fund has made 15 investments so far, focused across Latin America, CEEMEA (Central and Eastern Europe, the Middle East and Africa) and Asia.

“Regarding tradable credit opportunities, we aren't dependent on systemic distress in emerging markets to put capital to work,” he said in the statement. “[Emerging market] debt issuance has increased dramatically since the financial crisis so even if one assumes little change in default rates, there remains a tremendous number of opportunities to consider.”

A Gramercy spokesman declined to provide any additional information.

The closed-end fund has a five-year investment period and invests in both sovereign and corporate credit and will short bonds and hedge long positions, the firm said. It will also make direct loans and provide similar financings to financially stressed companies. Investors include the New Hampshire Retirement System (NHRS), which committed $50 million to the strategy.

NHRS was also an investor in the GDOF II, according to PDI data for the same amount, along with the New Mexico Educational Retirement Board and the Oklahoma Teachers’ Retirement System, which committed $125 million and $100 million, respectively.

Alongside emerging market funds with broad geographical mandates, Gramercy also raises vehicles targeted at specific countries. The firm launched its Gramercy Distressed Argentina Private Fund III on 27 October, according to a document filed with the US Securities and Exchange Commission federal regulator. It filed an update on its hedge fund-style Gramercy Venezuela Master Opportunity Fund, last Wednesday, which has raised $45.22 million.

Gramercy was founded in 1998 by Robert Koenigsberger to focus on distressed investments in emerging markets.