Distressed debt funds are very much back in fashion, as our H1 fundraising report shows. Following a strong 2017, fundraising in the strategy took a dip last year, but has rebounded as macro conditions become more challenging and problems begin to surface in portfolios.
For a full list of all H1 2019’s top funds, click here.
The biggest beneficiary of renewed LP appetite was Lone Star, which closed its 11th corporate distressed fund in February on $8.2 billion and the sixth fund in its real estate distressed debt series on $4.7 billion last month.
The $13 billion worth of fundraising may help the Dallas-based fund manager to reclaim its place at the top of the PDI 50 – a position it held in 2014, 2016 and 2017 but lost last year when it came third behind Goldman Sachs and Blackstone. The PDI 50 measures the amount of capital raised by private debt investment programmes over a five-year period.
Investors in Lone Star’s $8.2 billion corporate fund, which busted through its target of $6 billion, included the Chicago Policemen’s Annuity & Benefits Fund, New York State Teachers’ Retirement System and Teacher Retirement System of Texas.
The second-largest fund to be closed in H1 was BlueBay’s Direct Lending Fund III on €6 billion. The fundraising represents a significant increase in investing power for the London-based fund manager, which was 27th in the latest PDI 50 with just under $9 billion raised over the five-year period.
Other funds in the $4 billion-plus bracket were raised by Blackstone, Goldman Sachs and Cerberus Capital Management.