Woodman eyes third private debt fund in Q3

The Zug-based asset manager is targeting the launch of a third private debt fund in the third quarter, shortly after closing its second on $154 million.

Switzerland-based Woodman Asset Management is planning to launch Woodman Credit Opportunities III in the third quarter, PDI has learnt.

The Zug-headquartered fund of funds manager is eyeing the launch shortly after closing Credit Opportunities II on 30 June on $154 million, two years after investors committed $85 million to its predecessor.

For its second fund, the multi-family office accepted some external clients that wanted to invest together with the firm’s beneficial owners, Magnus Nilssen, a spokesman for the firm, told PDI. “No active marketing was conducted,” he added.

The aim of Credit Opportunities II, which had an initial target of $250 million, is to capture illiquid credit opportunities, arising from tighter regulation on financial institutions in the wake of the economic crisis.

Capital will be invested in various sectors across the US, Europe and Asia, with a focus on direct lending, risk sharing and special situations funds. Capital will also be used to make co-investments and, to a limited extent, structure bespoke deals.

Closed-ended private debt and other pooled investment vehicles will make up most of the strategy, Nilssen said, with a target to deploy capital in five to ten deals over the next 12-18 months. Half the capital from Fund II appears to be allocated for US exposure while more than half is targeted for direct lending opportunities, according to the firm’s website.

Credit Opportunities II has a four year investment period, whereas its predecessor had a two year investment period. Both have targeted net internal rates of return (IRR) of 12 to 14 percent.

Torben Degn is chief investment officer at Woodman and manager on both funds. Woodman’s first Credit Opportunities fund was invested in five funds including BlueBay Direct Lending fund, Highbridge Principal Strategies and Rothschild’s Five Arrows Credit Solutions. The first vehicle has yielded a net IRR of 9.1 percent as of 31 March 2015, Sofia Hellstrom, associate at Woodman, told PDI. Credit Opportunities II has a 10 percent performance fee on a preferred IRR or hurdle of eight percent. The firm also charges a management fee of 1.2 percent of net asset value (NAV).

Nilssen commented in an emailed statement that one of the initial purposes of the fund was to bridge the gap between smaller institutional investors and a diversified pool of strategies.

“One of the problems in accessing this market for most individuals and smaller institutional investors is the difficulties in constructing a diversified portfolio across regions, managers and sub-strategies due to the general high minimum commitment of target funds,” Nilssen said.

“Given our demonstrated ability to source and diligence funds, and construct portfolios with quick cash deployment and no J-curve, we believe that we are uniquely positioned to have another successful launch for Woodman Credit Opportunities III, which we expect to take place in Q3,” he added.

Founded by a Scandinavian multi-family office, Woodman Group manages $2.5 billion in various mandates, strategies and funds and has 26 investment professionals.