Providence Capital is getting ready to roll out a hedge fund focusing on distressed bank debt. According to sister publication Alternative Investment News, the fund, called Mauretania Partners, will launch July 1. Historically, opportunities with companies that defaulted on their bank loans were due to fundamentals, such as cyclical markets. But now, in the post-Enron world, the firm is seeing more cases of distressed companies as a result of unethical management, according toTom Schmidt, founder.
The new fund will be co-managed by Schmidt and his partner, John Kopchik. Schmidt formerly managed money within the distressed group at EBF & Associates, which has $1.5 billion in assets under management. Providence Capital currently has $160 million in assets under management, and Schmidt said he plans to cap his newest fund at $200 million.
The new fund will carry the same fees and minimum as Providence Capital's first arbitrage fund, Aquitania Partners. That fund carries a 1.5% management fee and a 20% performance fee, with a minimum for investment of $1 million.