Two New Distressed Debt Funds Take Shape

  • 09 Feb 2003
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Two more distressed debt shops are ramping up as players continue to look to capitalize on the mass of defaulting companies. Former Cerberus Capital Management portfolio manager Joyce Johnson-Miller is preparing a private equity fund and a hedge fund that will focus on distressed debt and a group from Octagon Holdings and Instinet have started a distressed debt shop. The Los Angeles-based firm, Altus Global Investors, plans to launch its first distressed debt fund before the end of the first quarter, said Stephen Sanderson, co-founder, who was the former head of institutional sales effort for the West Coast for Instinet.

The Altus Global Opportunities Fund will buy non-performing bank debt of private companies with the intention of taking control of the companies. It will focus on the basic manufacturing, chemicals, capital goods, distribution and consumer and industrial products sectors, Sanderson added. "There are a lot of small-tier private companies below the institutional radar screen, due to the increase in defaulted debt," he said. The strategy is built around the way banks and other financial institutions view loans within their investment portfolios. The fund will buy mainly senior bank debt backed by hard assets from banks such as Citibank, Bank of America and PNC Bank. In addition to the banks being motivated sellers, "There is a lack of competition when bidding for discounted bank debt," he added.

Johnson-Miller, managing partner at her startup JME Opportunity Partners, said the private-equity fund will be rolled out sometime in the next year and the hedge fund is slated to kick off next month. Both funds will look at distressed old-economy companies, with an emphasis on the automotive and aerospace sectors, said Johnson-Miller, who was a senior portfolio manager responsible for a distressed portfolio at Cerberus.

  • 09 Feb 2003

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 4,755 19 11.75
2 Citi 4,288 14 10.60
3 Rabobank 2,633 4 6.51
4 Goldman Sachs 2,615 4 6.46
5 Barclays 2,603 8 6.43

Bookrunners of Global Structured Finance

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1 Citi 82,367.33 238 12.89%
2 Bank of America Merrill Lynch 71,317.58 219 11.16%
3 Wells Fargo Securities 62,984.09 198 9.86%
4 JPMorgan 45,920.23 145 7.19%
5 Credit Suisse 37,235.50 114 5.83%