BellSouth Selects CSAM For Additional Distressed Opportunities

  • 28 Jul 2002
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The roughly $20 billion pension fund of BellSouth has hired Credit Suisse Asset Management to run its second investment in distressed debt. Alan Gasiorek, executive director of trust investments, said the fund chose CSAM because of its investment philosophy. "We like that they go for control," he said. "They're long-term players that look to create value." Although BellSouth committed to make the investment some nine months ago, the fund only recently hired a manager because it experienced several hiccups in the process, which Gasiorek declined to discuss.

The pension fund has no formal allocation to distressed debt, but Gasiorek said it currently has about $250 million invested in the subsector as part of its alternatives allocation. The fund prefers managers that look to take control of companies and create operating opportunities. "We're not into hedge funds that look to buy and flip," he added. In addition to CSAM, the fund invests with KPS Special Situations, but Gasiorek declined to say how much is run by each firm.

Distressed debt is an ongoing interest of the pension fund, although Gasiorek said it would need to evaluate the current state of the market before making any additional investments. He believes that the market is starting to get overcrowded, with a lot of money chasing too few deals. As a result, he expects deal quality and returns to begin to deteriorate, but he noted that this would happen to the "flippers" first.

  • 28 Jul 2002

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