LACERA places $100m with Glendon Capital

The ex-Barclays-led distressed debt firm is close to its target of $1 billion and has garnered commitments from a slew of other noteworthy institutions.  

Trustees of the $47 billion Los Angeles County Employees Retirement Association (LACERA) approved a $100 million commitment to Glendon Capital Management, the Santa Monica, California-based distressed debt spinout from Barclays, at a meeting on 10 December.

The firm was launched by Barclays’ former head of distressed debt, Matthew Barrett, with his old colleagues in 2013. It has reached its $1 billion target quickly and expects to hold a final close later this month, according to LACERA fund documents obtained by PDI.

The Glendon fund collected a $30 million commitment from the Ohio Police & Fire Pension fund last month, as previously reported by PDI. And according to LACERA’s fund documents, the firm has scored wins from other state pension funds, as well as prominent foundations, endowments and corporate funds. The roster includes fund-of-funds Pathway Capital Management as an anchor investor, as well as Pritzker Group, the Hilton Foundation, the State of Colorado and the AT&T corporation pension fund, among others.

Christopher Wagner and David Simpson, investment officers on the private equity team at LACERA, wrote in a memo to the board that the Glendon team is well tenured and performed strongly in the strategy, warranting the investment from LACERA.

“The Glendon team deployed an average of $1 billion annually during the 2007-2013 period while at BAMG. The team generated a 14.7 percent net IRR, which was 800 basis points above the S&P 500 during that same timeframe. This performance was accomplished with a 4 percent loss ratio,” the memo said.

The Glendon fund seeks to “capitalize on buying debt and equity investments in companies and markets experiencing distress or dislocation. Historically, around 90 percent of Glendon's investments have been in the US and Europe. Examples of market dislocations that the Glendon team has invested in include the municipal bond market collapse in 2010 and stressed credit conditions in Europe due to the sovereign debt crisis in 2012,” the memo continued.

Barrett founded the firm in December last year along with partners Brian Berman and Holly Kim. The trio had worked together before at Barclays and at Oaktree Capital Management.