SVP special sits fund hits $2.85bn hard cap

The latest in the firm’s special situations series is almost twice as big as its predecessor and has $350m set aside for a ‘fund of one’.

SVPGlobal (SVP), the Greenwich, Connecticut-based distressed debt and ‘deep value’ fund manager, has closed its fourth special situations fund on $2.85 billion.

Strategic Value Special Situations Fund IV has reached its hard cap, having surpassed its original target of $2.1 billion. The total raised includes $350 million of reserve capacity for a ‘fund of one’ relationship with an unnamed European pension fund.

Despite the fundraising success, Victor Khosla, SVP founder and chief investment officer, told PDI investors were far from a pushover. “Some of our large returning investors were in Ronald Reagan-style ‘trust but verify’ mode. There was no let-up in due diligence even though they were invested with us already.”

SVP’s first fund achieved a net internal rate of return of 16.3 percent and a multiple on invested capital (MOIC) of 2.0x; the second fund achieved 15.3 percent and 1.8x; and the third, which is early in its realisation period, had posted 15.0 percent and 1.4x by the end of last year.

According to Cambridge Associates data, Fund I is top quartile for multiple only; while funds II and III are top quartile on both an IRR and multiple basis.

Khosla said the firm’s returns showed its ability to reach around the 15 percent mark regardless of the cycle. “We have a very differentiated business model that allows us a steady pace of investment year in, year out. When there’s a crisis we lean in but for us it’s not all about boom and bust.”

The latest fund will continue the strategy of the earlier funds by focusing on the distressed debt of mid-market companies and assets where it seeks to have a meaningful influence on financial restructurings and operational improvements.

SVP invests around the world but with its main focus on the US and Europe. It has invested $27 billion since it was founded in 2001, including $12 billion in Europe. The firm was one of the first US distressed debt shops to establish itself in Europe, opening a London office in 2004 and Frankfurt in 2005.

“Europe is newer as a distressed market; it’s growing much faster [compared with the US] and it’s more inefficient,” said Khosla.

The firm has invested in the likes of SH-130, a Texas toll road; Syncora Holdings, a provider of monoline financial guarantee insurance; and Vita Group, the European supplier of polyurethane foam products.