Kennedy Lewis expects oversubscription for $1bn Fund II – exclusive

The vehicle, which is expected to be on the road slightly more than six months, offers a tiered fee structure allowing LPs that commit by year end to get the lowest charges.

Kennedy Lewis Investment Management is back in market with the second vintage of its multi-strategy credit fund and is anticipating a one-and-done close early next year, according to a source familiar with the matter.

Last month, the New York-based firm formally launched its sophomore fund, Kennedy Lewis Capital Partners II, with a $1 billion target. The vehicle is expected to be oversubscribed and hold a first-and-final close in March of next year, this person said.

The firm declined to comment.

The vehicle has a flexible mandate that allows the firm to invest in either performing or distressed credit in both the public and private markets. The firm’s verticals include non-traditional educational finance, power, life sciences and intellectual property.

Fund II offers investors an incentive to get in sooner with a tiered fee structure, though the hurdle remains set at 7 percent for all investors, this source said. The discounted fee structure charges a 1 percent management fee on committed capital and a 15 percent incentive fee for those that commit by year end.

Those that commit from 1 January to 31 March next year will be offered a 1 percent management fee on committed capital plus 0.5 percent on invested capital and a 17.5 percent incentive fee. Those that commit in April or later will be charged 1 percent on committed capital plus 1 percent on invested and a 20 percent incentive fee.

David Chene and Darren Richman founded KLIM in November 2017. The firm hit the $500 million hard-cap on its debut fund in December. Chene was previously a managing director at Minneapolis, Minnesota-based CarVal Investors where he oversaw the firm’s US corporate securities business. Richman was previously a senior managing director at New York-based GSO Capital Partners, where he worked on special situations and distressed debt investments.