Current Distressed Private Equity Fundraising

by Adam Counihan

  • 11 Oct 2010
  • PE

Preqin’s research reveals that there are 58 distressed private equity vehicles fundraising at present, targeting an aggregate USD 40 billion in capital commitments. In terms of the number of vehicles currently on the road, more than half (59%) target the North American market, 19% will focus on distressed investment in Europe, while 22% of the funds are seeking investment opportunities in Asia and Rest of World.

Preqin data shows that from 2007 to present USD 132 billion in capital has been raised by distressed private equity fund managers. Of the 126 funds that reached final close since 2007, 82 primarily focus on investing in North America. These 82 funds accounted for 86% of the aggregate capital raised worldwide. Funds focusing on distressed debt, special situation and turnaround investment in the Asia and Rest of World region accounted for 4% of aggregate capital raised globally, while the 26 European-focused funds raised in this time accounted for 10%.

Data from Preqin’s Funds in Market product shows that so far this year 22 distressed private equity funds have reached a final close. They garnered an aggregate USD 21 billion in capital commitments. The largest fund to reach a final close was OCM Opportunities Fund VIII managed by Oaktree Capital Management, which closed in April on USD 4.4 billion, just short of the funds original target of USD 5 billion. The fund focuses on pursuing non-control, distressed debt investments in fundamentally undervalued debt securities of distressed companies in the US, Europe and to a lesser extent Asia.

The second largest distressed private equity vehicle to have closed this year was OCM Principal Opportunities Fund V, again managed by Oaktree Capital Management. The fund held a final close in February on USD 3.3 billion, exceeding the funds initial target of USD 3 billion.  It targets control, or significantly influential, investments in primarily middle-market companies, preferably via the purchase of distressed debt and, when such distress-for-control opportunities are not available, through private equity investments.

The third largest distressed private equity fund, and the largest not to be managed by Oaktree Capital Management, was GSO Capital Solutions Fund. Managed by the Blackstone Group, the fund held its final close in July on USD 3.2 billion. GSO Capital Solutions Fund is a rescue financing fund. Its investments are primarily debt with equity upside. The fund’s strategy is focused on providing privately negotiated capital solutions to companies in need of liquidity or significant capital structure transformation due to pending covenant violations, debt maturities, cyclical downturns in their businesses or other funding requirements.

For more information on private equity fundraising please see Preqin's Funds in Market

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