Distressed Private Equity Funds

by Louise Maddy

  • 04 Apr 2011
  • PE

Preqin data reveals there are currently 63 distressed private equity funds on the road seeking an aggregate USD 43.8 billion in capital commitments. 51% of these funds have held at least one interim close, raising a combined USD 7.5 billion in capital. Distressed debt funds are aiming to raise 69% of total capital being targeted, and special situations vehicles 17%. Turnaround vehicles are aiming to raise the remaining 14% of capital being sought for distressed private equity investment.

The largest distressed private equity vehicle currently on the road is the WLR Recovery Fund V which is targeting USD 4 billion. The fund focuses on investing in and restructuring financially distressed companies in the US with a specific focus on opportunities in the chemicals, construction, energy, industrial and infrastructure industries.

The second-largest distressed private equity fund is OCM European Principal Opportunities Fund, which is aiming to raise EUR 3 billion. The fund invests in troubled companies in Europe and focuses on a diversified range of industries.

Centerbridge Capital Partners II is the next largest distressed private equity vehicle currently on the road. This US-focused distressed debt fund is seeking USD 3.8 billion to invest in distressed asset transactions and more traditional buyout transactions.  This fund focuses on a broad range of industries and is expected to reach a final close in Q2 2011.

In 2010, 36 distressed private equity-funds closed raising USD 27.3 billion in aggregate capital. OCM Opportunities Fund VIII was the largest fund to reach a final close in 2010, raising a total of USD 4.4 billion. The vehicle focuses on pursuing non-control, distressed debt investments in undervalued debt securities of distressed companies. Its geographical focus is primarily on the US and Europe, but also considers investments in Asia.

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