There are currently 68 distressed private equity fund in market aiming to raise an aggregate amount of just over $42bn in capital commitments according to Preqin’s Funds in Market. Of these funds currently raising capital, 28 have held at least one interim close, collecting just shy of $6bn in capital commitments to date.
Distressed private equity is split into three types including distressed debt, special situation and turnaround. Distressed debt currently accounts for the largest proportion of aggregate capital being raised, making up 54% of the total, and with seven out of the 28 funds having already held at least one interim close. Special situation and turnaround funds account for the remaining capital targeted, making up 30% and 16% of the total respectively.
By geographical focus, 32 distressed private equity funds focus predominantly on investing in North America, accounting for almost 61% ($26bn) of the total capital targeted. Twenty-one Europe-focused funds in market collectively seek to raise $9bn; making Europe the second most common place to invest in distressed private equity opportunities. Asia-focused distressed private equity funds account for just less than 13% of the total capital targeted, with six out of 10 funds having already held at least one interim close.
The average target size of the 68 funds in market is $678mn, with the largest fund, Mount Kellett Capital Partners III, seeking $4bn. Mount Kellett Capital Partners III has a diversified industry focus and an investment strategy centred on global opportunistic and special situation investments. The second and third largest funds are OCM Principal Opportunities Fund VI and Sun Capital Partners VI respectively, both targeting $3bn in capital commitments.
OCM Principal Opportunities Fund VI is a distressed debt fund with up to 80% of the targeted capital allocated to invest in North America and the remaining assigned to invest in both Europe and Asia. Sun Capital Partners VI, managed by Florida-based Sun Capital Partners, predominantly targets turnaround and special situation investments across North America and Western Europe.
In 2013 so far, 25 distressed private equity funds have reached a final close, having raised just under $24bn in capital commitments, with the average final close size amounting $991mn. Out of the 25 distressed debt funds, there are 14 North America-focused funds, three Europe-focused, seven Asia-focused and one remaining fund focused predominantly on investing in distressed private equity opportunities in regions other than Europe, Asia and North America.