Murry Stegelmann, a managing director and head of the bank loan group at General Electric Capital Corp., is set to leave the firm in the next few weeks to start a distressed debt fund based in Norwalk, Conn. Stegelmann is dipping his toes into the pool of distressed funds that have formed in droves in recent years, responding to the market's downturn and the resulting influx of distressed paper. Stegelmann declined to comment.
As first reported last Wednesday on LMW's Web site, the fund is still in the beginning stages of planning, according to an official familiar with the situation, noting that a name has not even been decided at this point. The target for the fund will be in the $400-500 million range, with a broad sector base, and Stegelmann will recruit about six new employees. No hires have been made at this point. He added that Stegelmann's shop will principally consist of bank debt and senior notes.
"The current market environment is as attractive as it's been in years," the official said, explaining why Stegelmann and others are making a run in the arena. "You don't know how long it will last." Distressed debt shops have to find their niche because of the recent crowding, he said, noting that with the increase of distressed companies inevitably there will be more distressed funds forming in response. At GECC, Stegelmann reported to Michael Gaudino, president and ceo of GE Corporate Financial Services. A spokesman confirmed Stegelmann was set to leave the firm, but said it was too early to determine how the firm would fill the void. Word of Stegelmann's imminent departure comes just after Richard Buckanavage, a managing director for sales and market intelligence in the loan syndication group at GE, left to start a middle market leveraged buyout shop (see story, page 2).