MHR reaches third close on distressed fund

 The New York-based firm has raised an additional $1.6 billion for its fourth distressed fund.  

MHR Fund Management has reached a third close on $1.6 billion for its MHR Institutional Partners IV fund, according to a US Securities and Exchange Commission filing issued on Wednesday. Sources say the fund has raised $2.25 billion, including near term commitments, and aims to close the fund on June 30th. 

A spokesperson for MHR declined to comment.

MHR is working with UBS Securities to find investors for the fund and has paid $2.5 million in sales commission, according to the filing. Last March, Institutional Partners IV reportedly secured a $75 million investment from the Minnesota State Board of Investment. 

MHR has been marketing the mid-market focused Institutional Partners IV since the end of 2013 and hopes to raise $2.75 billion for the fund. Its predecessor fund closed on $3.5 billion in 2007,  more than three times the size of the second in the series, which closed on $856 million in 2002.

Market turmoil is thought be driving an increase in fundraising for distressed debt and special situations funds lately. Apollo Global Management , KKR and Solace Capital Partners are in the market with special situations funds while the Carlyle Group and Oak Hill Advisors are both raising global distressed funds.

MHR Fund Management is a special situations and distressed investment firm that manages $5 billion in assets and pursues bankruptcy or restructuring processes for its mid-market portfolio companies. The New York headquartered company was founded in 1996 by Mark Rachesky, formerly a chief investment advisor to Carl Icahn.

*This story was updated on 2 May to include the targeted closing amount  and date with new information.