Latest HIG fund closes on $1.5bn amid signs of strife in Europe

With Cheyne’s €1bn close earlier in the week, an HIG Bayside vehicle is another to target ‘challenging’ conditions for smaller businesses in the region.

HIG Bayside Capital, the Miami-based distressed debt and special situations manager, has closed its latest European fund on $1.5 billion. The total includes commitments from the GP and for related separately managed accounts.

The HIG Bayside Loan Opportunity Fund V (Europe) will continue prior European funds’ focus on investing in small-cap, special situations credit opportunities in the region.

The prior three funds in the European series all closed on $1.1 billion, slightly above their $1.0 target according to PDI data. Fund IV was a 2014 vintage, Fund III was 2012 and Fund II was 2010.

“Economic conditions in Europe remain challenging, especially for smaller businesses,” said John Bolduc, executive managing director and head of HIG Bayside Capital. “Our pan-European credit team is well positioned to address this need and capitalize on the compelling investment opportunities available in the European credit markets.”

The firm claims to have the largest platform focused on the lower end of the capital markets, with European offices in London, Hamburg, Madrid, Milan and Paris. It has already put to work 38 percent of the new fund’s capital.

HIG said it had received support for the new fund from North America, Europe and Asia, with institutional investors including consultants, endowments, foundations, sovereign wealth funds, financial institutions and public and corporate pensions.

It did not disclose individual investors, but investors in the series’ Fund IV included AP Fonden 2, Maine Public Employees Retirement System, Massachusetts Pension Reserves Investment Management Board and Pennsylvania State Employees’ Retirement System, according to PDI data.

With fears over Europe’s economic performance and political instability, together with a sense that the credit cycle may be on the turn, the spotlight on distress and special situations is intensifying. Also this week, London-based fund manager Cheyne Capital Management closed a fund on €1 billion that it said would “seek to take advantage of increased dislocation and heightened illiquidity in sub-investment grade credit markets as the current late-stage credit cycle advances”.

HIG Bayside Capital is part of HIG, the global private equity and alternative assets manager with more than $31 billion under management. The debt strategy focuses on senior, unitranche and junior debt financing to companies across the size spectrum in both the primary and secondary markets.

HIG is also a leading CLO manager through its WhiteHorse family of vehicles and manages a publicly traded BDC, WhiteHorse Finance.