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Top Performing Asia- and Australasia-Focused Private Debt Funds of the Past Decade – December 2015

by Andre Bally

  • 11 Dec 2015
  • PD

Preqin’s Private Debt Online service currently tracks the performance of funds that adopt a direct lending, mezzanine, special situations, distressed or venture debt strategy. As the private debt asset class gains popularity and begins to claim a growing portion of investors’ portfolios, it is useful to note the level of returns such funds may provide. This blog will shed light on the top performing Asia- and Australasia-focused private debt funds, by net IRR, in the past decade.

Fortress Investment Group leads the way, with two of its distressed debt funds generating the two highest levels of net returns over the past 10 years in the private debt space. The 2008 vintage Fortress Credit Opportunities Fund has achieved a net IRR of 24.9%, which equates to a net multiple of 1.35 times its $3bn close. Its successor, the 2010 vintage Fortress Credit Opportunities Fund II achieved a 22.8% net IRR – providing investors with a 1.28 net multiple return of its $2.6bn close. The latest fund in the series, Fortress Credit Opportunities Fund IV, has just reached a final close on $5bn in September 2015.

CarVal Investors has achieved an impressive 2.06 net multiple return on its 2010 vintage distressed debt vehicle, CVI Credit Value Fund. The $856mn fund has earned third place with a net IRR of 21.7%, while its successor fund, CVI Credit Value Fund III, reached a final close of $3bn in December 2015.

The fourth fund on the list is the 2012 vintage Cerberus Institutional Partners V, with a net IRR of 20.8%. Cerberus Capital Management achieved a 1.37 net multiple return on its $2.6bn fund through investments in undervalued and distressed companies. Its follow-on fund, Cerberus Institutional Partners VI, is currently raising capital and intends to reach a final close on $3bn. Finishing the top five performing Asia- and Australia-focused private debt funds in the past decade is Strategic Value Special Situations Fund II. The 2010 vintage fund secured its spot with a 16.5% net IRR on its $918mn close. A noteworthy fund is its 2008 vintage predecessor, Strategic Value Special Situations Fund, ranking sixth on the list with a 15.2% net IRR. The latest fund in the series, Strategic Value Special Situations Fund III, closed on $1.3bn earlier in 2015.

Preqin’s data shows that distressed debt funds are the dominant fund type, with nine of the top 10 performing Asia- and Australasia-focused private debt vehicles in the past decade adopting the strategy. As a whole, private debt fund managers are demonstrating the ability to provide relatively safe returns, with Preqin data showing that only two Asia- and Australasia-focused private debt funds have recorded a negative net IRR in the past 10 years.

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