Invesco, WLR credit fund to buy stressed credits: exclusive

The New York-based firms, a behemoth of a financial institution and a respected turnaround investor, respectively, have set up a five-year vehicle. 

Invesco and affiliate WL Ross & Co. are in the market with $500 million fund seeking to invest in bank loans of stressed companies.

The vehicle, which recently held a first close, is a partnership between the two firms and will seek to buy undervalued bank debt and sell it at a higher price, according to a source familiar with the situation. The firm disclosed the Invesco WLR Credit Partners Fund launch in a regulatory filing last month but did not elaborate on the strategy.

The fund has a five-year life – consisting of a two-year investment period and a three-year harvest period – making its duration shorter than many other closed-end credit funds, this person said. Terms for the fund include a 1.5 percent management fee on invested capital and a 20 percent incentive fee along with an 8 percent hurdle rate.

Paul Triggiani, a WLR Credit Partners managing director who currently heads its distressed debt operations, will oversee the effort. Triggiani, who also worked on the distressed desks of HIG Bayside Capital and Strategic Value Partners, could not be reached for comment.

WL Ross’s flagship vehicles are the WLR Recovery Fund series, of which its most recent one, Fund VI, is a 2016-vintage fund targeting $2 billion, according to data from Private Debt Investor publication Private Equity International.  

Fund V in the series, a 2010-vintage vehicle, raised $2.2 billion and targeted investments in North America but retained the ability to invest up to half its capital overseas, according to October 2010 documents from the Oregon Investment Council. The average investment size was expected to be between $100 million and $200 million.

WL Ross, founded in 2000, has restructured more than $200 billion in liabilities and drawn $11.9 billion in capital spanning 178 companies in 14 industries as of year-end 2015, according to its website. US President Donald Trump tapped firm’s namesake and founder Wilbur Ross for commerce secretary, whom the Senate confirmed in February.

Invesco managed $812.9 billion in assets in 11 companies as of 31 December, according to the firm’s website. It announced a deal to buy WL Ross in July 2006 for up to $375 million, according to a statement at the time. The deal closed in October of that year. The purchase price consisted of a $100 million upfront payment along with five annual earn-out cash payments of up to $55 million each. The deal was financed using existing cash and debt from Invesco’s credit lines.