Z Capital promotes four to partner

CFO Jonathan Schmugge and general counsel Martin Auerbach are two of the four professionals named senior managing director-partner. The promotions come as Z Capital targets $500m for its second special situations fund.

Chicago-based mid-market investor Z Capital Partners has promoted four executives to the role of senior managing director-partner.

The promoted executives include general counsel Martin Auerbach, chief financial officer Jonathan Schmugge, and investment team members Christopher Kipley and Rahul Sawhney. All four professionals were previously managing directors at the firm, having joined in 2006 from Black Diamond Capital Management with Z Capital founder and chief executive officer James Zenni.

Auerbach previously held the role of consulting general counsel to BDCM. He specialises in the representation of financial institutions and their management, having worked as an assistant US attorney responsible for large-scale tax prosecutions before entering private practice.

Schmugge was previously CFO and chief accounting officer at BDCM. He is responsible for all aspects of accounting and financial reporting at Z Capital. Before joining BDCM, Schmugge was a fund accountant with Oppenheimer and Company’s hedge fund accounting department.

Kipley previously held the role of managing director at BDCM, where he was responsible for managing distressed debt and private equity investments. Prior to joining BDCM, he was an associate in Bank of America National Trust and Savings Association’s corporate finance department.

Sawhney was previously a member of the investment team at BDCM, where he managed investments in the automotive, consumer products, containers and packaging, metals and mining, and technology sectors. Prior to joining BDCM he worked in credit and restructuring at JPMorgan Chase and Company.

In September, Z Capital came to market with its second special situations fund, which has a $500 million target, according to a source familiar with the situation. Dow Jones previously reported news of the fundraising. The firm’s previous distressed fund, a 2007 vintage, collected $300 million after revising its initial target from $1 billion down to $500 million, according to Dow Jones. That fund invests in distressed US-based companies in the financial services, gaming, and consumer products sectors. As of 30 June 2012, Cambridge Associates has Fund I generating a 25 percent net internal rate of return, according to a market source outside of Cambridge

Z Capital declined to comment.

The firm specialises in managing assets in both distressed private equity and leveraged finance investments, focusing on control strategies using distressed debt, typically involving purchasing portions of debt in struggling companies to obtain control of the company. In addition to the four senior managing director-partners, Z Capital is comprised of four managing directors, four directors and seven operating partners.