HIG affiliate closes $3bn distressed debt fund

Bayside Capital will provide refinancing and equity infusions to companies with total enterprise values of less than $400m.

HIG Capital’s distressed debt and turnaround affiliate, Bayside Capital, has closed its second fund on $3 billion (€1.9 billion).

Bayside Capital II will be used to provide equity infusions and refinancing packages to small- to mid-market companies experiencing financial hardships. The firm, which shares its Miami headquarters with HIG, will also use the global fund to purchase existing debt on the secondary market.  

Led by Levin Leichtman Capital Partners veterans Tiffany Kosch and Lewis Schoenwetter, Bayside targets companies with total enterprise values of less than $400 million. The firm typically pursues transactions of around $100 million, according to its website.

Like many other multi-strategy firms, mid-market specialist HIG is seeking to capitalise upon the current environment of widespread credit and leverage contraction, offering alternative sources of equity and debt to businesses desperate for refinancing.

Private equity firms have been heavily active in distressed debt and turnaround fundraising this year, with Oaktree Capital Management’s record $10.9 billion fund close punctuating the trend last month.

Bayside’s current portfolio includes majority stakes in Gemini Air Cargo, a Virginia-based air freight servicer which the firm scooped up out of bankruptcy in 2006, and Diam Europe, a French designer and manufacturer of high quality point of purchase displays for cosmetics.

In related news, HIG has completed its $92 million acquisition of Chicago-based oleochemical manufacturer Croda International.

HIG and Croda’s management team plan to use the company as a platform for a buy-and-build strategy within the specialty chemical industry. Oleochemicals are oil- and fatty acid-based compounds commonly used in personal care products, industrial lubricants, chemical derivatives and other household and industrial formulated products.