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Europe-Focused Distressed Private Equity Fundraising

by Nicholas Jelfs

  • 21 Nov 2011
  • PE

The current economic and financial climate across Europe is likely to present greater opportunities for distressed private equity investing for the foreseeable future. Preqin’s Funds in Market product currently lists 19 distressed private equity vehicles on the road that have a primary geographical focus within Europe. Collectively, these funds are targeting an aggregate EUR 10.7 billion in capital, and at time of writing, eight of the vehicles have completed at least one interim close having raised just over an aggregate EUR 2.5 billion in commitments. Only three of the 19 vehicles will seek opportunities outside Europe, and these are targeting a collective EUR 1.5 billion.

Breaking the funds down by type, Preqin’s research reveals that the most numerous distressed private equity funds in market are distressed debt vehicles, with eight out the 19 funds adopting this strategy and collectively seeking EUR 5.2 billion. This is followed by five special situation funds targeting EUR 4.1 billion and a further six turnaround funds targeting EUR 1.4 billion. With respect to fund manager headquarters, six of the vehicles are being raised by US-headquartered GPs and are seeking almost EUR 8.5 billion (79%) of the aggregate capital. This is followed by the UK, with fund managers headquartered here raising five of the funds and targeting EUR 848 million.

The three largest funds in market are OCM European Principal Opportunities Fund III, Apollo European Principal Finance Fund II and Avenue Europe Special Situations Fund II. The first is a special situations fund being raised by Oaktree Capital Management. The vehicle, which is targeting EUR 3 billion in investor commitments, makes investments in troubled European companies and has no specific industry focus.

Apollo European Principal Finance Fund II, being raised by Apollo Global Management, is a distressed debt fund that targets the non-performing loans market in Europe, and is seeking EUR 2.5 billion in capital commitments.

Avenue Europe Special Situations Fund II is seeking USD 1.5 billion to make debt and select equity investments in European firms that are experiencing financial distress. The fund focuses primarily on Northern Europe, including the UK, Germany, Benelux and the Nordic region, with no specific target industries.

Another fund of note is Strategic Value Special Situations Fund II, being raised by Strategic Value Partners. It has almost doubled its original target size to specifically invest in distressed opportunities across Europe. The fund is targeting USD 1.1 billion, up from USD 600 million, to make special situations investments in companies based in Europe, North America and Asia.

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