Citadel Investment Group is considering rolling out a distressed debt fund early next year, according to Alternative Investment News, a CIN sister publication. "The fund is a while down the pipeline, but it is definitely something we want to do," an insider at the $12 billion hedge fund shop said. Ken Griffin's Chicago-based firm has made several hires for analysts and traders in this space to prepare for the launch, the insider added. One of the new additions, Joe Russell, former head of high-yield loans and leveraged debt at Credit Suisse First Boston, could head up the team that will work on the new fund.
But an outside spokeswoman for Citadel denied there is a new fund in the works and said any new hires in the credit area could simply mean the firm is enhancing its coverage in its fundamental credit strategies.
Hedge fund activities in the distressed space have picked up in recent months. "Things were quiet for a while, but there are so many more opportunities now that hedge funds are flooding the market now," said one distressed analyst. Weiss, Peck & Greer, part of Robeco Investment Management, newly formed Venor Capital, Plainfield Asset Management and Aurelius Capital Management -- another new venture --are among the other firms that have recently launched strategies in this space.