Highbridge Capital Management closes on $2bn fund

The vehicle targeting event-driven convertible instruments and relative value includes $685m of equity commitments.

Highbridge Capital Management has held a final close of its Highbridge Convertible Dislocation Fund on more than $2 billion, including some $685 million of equity commitments. It is understood that the remainder constitutes leverage.

The fund was converted from a $2 billion multi-strategy fund to a credit fund in June of last year amid a slowing bull market in that type of fund and as clients were showing interest in other investments, according to Reuters. As part of the change, one of the four lead portfolio managers, Arjun Menon, left the company. Investors were allowed to shift their capital to the new fund or pull some or all of it out at a time the fund was delivering gains to investors, Reuters reported.

In the statement announcing the latest close, Highbridge said the fund was formed in response to convertible market dislocations that began with the onset of covid-19 in March, and will invest in relative value and event-driven convertible instruments focusing on North America and Western Europe. The fund, which is consistent with Highbridge’s longstanding commitment to relative value alternative investment strategies, began investing in June and is about 50 percent invested.

Maryland State Retirement and Pension System committed $100 million to the fund, Private Debt Investor reported last week.

The firm’s focus on credit and volatility investment strategies “provides a platform for consistent idea generation and investment opportunities”, Highbridge, a unit of JP Morgan Asset Management, said in a statement. Highbridge may mobilise capital utilising opportunistic investment vehicles to capture market dislocation events, the firm said. Highbridge benefits from the JP Morgan Asset Management umbrella, with a $145 billion platform spanning real estate, infrastructure, transportation, hedge funds, private equity, private credit and liquid alternatives.

“While convertible market valuations have rebounded, primary market issuance, which now exceeds $100 billion in 2020, continues to be a source for new ideas and a driver of secondary market trading opportunities,” Jason Hempel, co-CIO of Highbridge, said in a statement.

Highbridge believes that convertible debt “will remain an attractive capital market solution for many borrowers due to the global rise in equity markets and the flexibility that convertible notes offer to management teams in a period of uncertainty”, Jonathan Segal, co-CIO of Highbridge, said.