Strategic Value Partners closes $1.65bn distressed debt vehicle

The 'custom mandate' has already invested more than 25 percent of its capital and is investing across various distressed strategies.

Strategic Value Partners has held a final close on a more than $1.65 billion “custom mandate” that will operate across its distressed debt platform.

The custom mandate, Strategic Value Dislocation Fund, will be able to invest in “an evolving set of opportunities”, including liquid and event-driven trading and debt-for-equity restructurings, a statement by Strategic Value Partners, known as SVPGlobal, said.

More than 25 percent of the custom mandate has already been deployed, including an investment in and agreement for a debt-for-equity restructuring in Swissport, a European logistics company. The custom mandate has also invested in OmniMax International, a US roofing and drainage company that has agreed to be acquired by funds managed by SVPGlobal.

The dislocation fund, whose final close occurred on 30 September, included commitments from 15 institutional investors, about half of which had existing relationships with the firm, the statement said. The capital was raised in four months entirely through virtual meetings. The custom mandate is separate but complementary to SVPGlobal’s Strategic Value Restructuring Fund and its Strategic Value Special Situations funds. SVPGlobal’s most recent special situations vehicle, Fund IV, was closed in April 2018 at its $2.85 billion hard-cap.

SVPGlobal declined to provide further details on target returns or fees.

Victor Khosla, SVPGlobal founder and chief investment officer, said the market dislocation of the past six months “has created a once in a decade opportunity and substantially expanded the range of compelling distressed debt investments”. He said the custom mandate would take a hybrid approach, with a mix of investments ranging from more tactical trades to taking control of and supporting companies that have sound underlying businesses but overleveraged balance sheets.

Because the firm sees the opportunity spanning several years, it has expanded its investment team to 49 people, an increase of more than one third since it launched its last fund, and the total team to 121 people.

SVPGlobal, based in Greenwich, Connecticut, is a global investment firm with more than $9 billion of assets under management.