Firms & Funds

Avenue expects final close at year end for Europe Fund III

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  • Avenue targets 2 bln euros for special situations fund
  • Firm holds 1.1 bln euro first close in June
  • Previous Europe special situations fund netting 9.6 pct

Avenue Capital Group will likely close its third European special situations around the end of the year, according to a public LP document.

Avenue held a first close for Fund III on 1.1 billion euros in June and has already started investing from the fund, said a Portfolio Advisors memo included inPennsylvania Public School Employees’ Retirement System documents.

Avenue set a 2 billion euro ($2.25 billion) target for the fund, roughly $600 million less than the $2.8 billion the firm raised with Avenue Europe Special Situations Fund II in 2012. Fund II generated a 9.6 percent internal rate of return and 1.22x multiple as of March 31, according to pension documents.

PSERS committed $214.6 million to the firm’s first dedicated European special situations fund in 2008. Fund I netted a 12.2 percent IRR as of March 31, the pension has reported.

Avenue expects to invest the bulk of Fund III in individual corporate and distressed debt securities, as well as other special situations in Western Europe, according to retirement system documents. As much as 65 percent of the fund’s capital will go toward acquiring corporate debt from banks, which Avenue will then restructure.

While Fund III does not have any sector focus, the firm prefers to invest in businesses with tangible assets and predictable cash flows, PSERS Investment Officer James Del Gaudio wrote in a memo.

Todd Fogarty of Kekst and Company, which handles media relations for Avenue, declined to comment.

Marc Lasry and Sonia Gardner founded Avenue in 1995. The New York-based firm manages approximately $13.2 billion and has offices in London, Luxembourg, Madrid, Milan and Munich, as well as four offices in Asia.

ACTION ITEM: For a more PSERS’ assessment of Avenue’s new fund, click here: http://bit.ly/1Zh7y03