TPG Credit arm raises $605m aviation fund

The 6-year-old distressed debt affiliate -- which is also rumoured to be raising a new distressed debt fund -- beat its $400m target.

TPG Credit Management has closed its Airline Credit Opportunities II fund on just over $604 million after roughly one year of marketing. Its first such fund closed on $173 million in December 2005.

ACO II, which had been targeting $400 million, will invest in various aspects of aviation capital structures and geographies, but will mainly focus on “current market imbalances where unleveraged acquisitions of aircraft and aircraft-related obligations are offering above average returns”, according to a statement.

Managing partner Rory O’Neill said the firm appreciated the confidence and support of LPs, which included endowments, fund of funds, pensions, family offices and foundations. “We had the opportunity to meet with existing and new LPs and communicate our past performance and what we believe is a compelling new opportunity for investment in the airline sector,” he said in a statement.

Denning & Company was the fund’s placement agent.

TPG Credit, which has offices in Minneapolis and London, was launched in 2005 and has raised $2.2 billion to date across four funds, including a $1 billion fund for distressed credits and “hung bridge” loans stuck on bank balance sheets after the subprime and financial crises. It also raised the TPG Credit Strategies Fund, which collected $443 million and invested alongside the firm’s TPG Credit Opportunities fund, according to PE Insider. Several media reports indicate the firm may soon raise another $600 million to $700 million distressed debt fund.

The firm could not immediately be reached for comment. Denning & Company declined to comment on the firm's other funds or fundraising plans.

The Carlyle Group, Guggenheim Partners and Fortress Investment Group also have aviation or aviation finance-related investments and/or manage dedicated aviation investment units.

Last month, Cinven, CVC Capital Partners and Oak Hill Capital Partners invested a further $250 million into aircraft leasing company Avolon, bringing the trio’s total equity investment in the company to $1 billion.