US Debt Ventures is finalising commitments for its fourth debt fund, with a view to holding a final close on $150 million by the end of the year.
The distressed whole loans and real estate debt fund management business was launched by ex-Nasdaq trader Todd Billings in 2008. The fund finances performing and non-performing loans by either buying pools from Federal Deposit Insurance Corporation-authorised agents, or partnering with the FDIC and purchasing distressed assets in the open market.
“We focus on maximising returns by pursuing the best risk-adjusted work-out strategy on a loan to loan basis, on behalf of its investors,” Billings told Private Debt Investor.
Since its inception in 2008, the firm has successfully raised four funds, and has deployed all funds, according to Billings. However, the firm has been vigilant in keeping its deals and transactions under wraps.
Billings believes that the “discreet nature” of the firm – in that its activities, transactions and deals are kept “low profile” – works in its favour.
“We are seeing more money flooding in from high net worth investors who do not want their activities and their investments to be widely publicised,” added Billings.
On the LP side, commitments have been sourced primarily from high net worth investors based in Canada, South America and Asia.
“We are not targeting institutional investors; that market is already catered for in the US and there is a lot competition on that front,” explained Billings. “We are a small niche debt fund manager, leveraging off personal relationships with wealthy investors, and executing deals that offer compelling returns on their behalf.”
He believes the US leveraged loan market is recovering. “We are at the beginning of a new economic cycle and debt has become thematically popular for investors.”
Last week, an unnamed “major US-based financial institution” provided a term loan facility of $100 million to US Debt Ventures. The firm hopes to surpass $1 billion in total portfolio purchases in 2013, following the close on this financing facility. In addition, the loan gives the firm increased capacity to expand its non-performing loan and real estate disposition model.
US Debt Ventures purchased an unpaid principal balance portfolio of non-performing mortgages for $54 million in April. Also, the firm recently purchased $500 million in nonperforming residential mortgages from an undisclosed major bank at a significant discount.