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Distress Specialist Hits $1B Mark

Firm: Avenue Capital

Fund: Avenue Special Situations VI LP

Target: $2 billion

Amount Raised So Far: $1 billion

Legal Adviser: Paul, Weiss, Rifkind, Wharton & Garrison LLP

Avenue Capital recently held a third close for Avenue Special Situations VI LP, racking up a total of $1 billion so far for non-control investments in troubled U.S. and European companies.

Avenue Special Situations VI has a $2 billion target, according to a University of Michigan document. The distressed debt fund will be used for investments in the “debt, select equity securities or other obligations of companies in financial distress,” the document said.

The firm is likely to hold the fund’s final close in the first quarter of 2011.

The New York-based shop uses a “theme-driven, concentrated investment strategy that is analytically intensive and relies upon individual credit, industry and macro research and analysis,” the Michigan document stated. When an investment opportunity is located, the firm then finds the most attractive investment in the business’s capital structure by deciding which security there is the most undervalued in relation to fundamental value and investment risk.

The Massachusetts Pension Reserves Investment Management Board committed $150 million to the fund; the Pennsylvania State Employees’ Retirement System recently pledged up to $20 million; the University of Michigan committed $30 million; and the Wisconsin Investment Board pledged $75 million.