Managers of the Quadrangle Group’s distressed debt fund are making market headway, despite being embroiled in litigation by their former employer.
In an email sent to investors on June 5 and obtained by Private Equity Week sister publication Buyouts, the Quadrangle Debt Recovery Fund (QDRF) so far has raised over $100 million since being launched at the beginning of April. The vehicle is being marketed with a target capitalization of $500 million, and holds capital calls at the beginning of each month. QDRF received approximately $10 million of internal commitments (including $5 million from its investment team) in April, another $40 million in May and an additional $50 million in June.
According to the email, QDRF earned 0.70% net of fees for the month ending May 31. Since inception through May 31, the fund has earned 1.21% net of fees. No information about specific allocations was available at press time, although the fund is expected to pump between 30% and 40% into telecom and media deals. The rest will be disbursed across a variety of other industries.
While the distressed debt vehicle is having little trouble enticing investors, its success is rubbing at least one group the wrong way.
QDRF is co-managed by Michael Weinstock and Andrew Herenstein, both of whom joined Quadrangle in February after less than a year spent running the distressed debt program for Lazard LLC. The following month, Lazard began winding down its Debt Recovery Funds and claimed in a Delaware court filing that the pair had breached fiduciary responsibilities to both the funds and the firm.
“We believe that this lawsuit is without merit and, thus, recently filed a motion to have the case dismissed,” said the email to QDRF investors signed by Weinstock and Herenstein. “This litigation has no impact on investors in QDRF and has not been a material distraction to us in our daily investing activities.”
Lazard did not return calls requesting comment on the suit.
Quadrangle Group was formed in 2000 as a telecom-focused investment firm by former Lazard investors Steve Rattner, David Tanner, Peter Ezersky and Joshua Steiner. Its first venture was a private equity vehicle that closed on $1.08 billion last summer.
Contact Dan Primack