On Tuesday, Strategic Value Partners (SVPGlobal), the Greenwich, Connecticut hedge fund that invests in special situations, event-driven, distressed debt and other private equity targets–and which has recently made a mark in debt-to-equity restructurings of aviation, industrial and real estate companies–announced the successful closing of its fifth “special sits” fund (SVSS V).
The fund had an initial target of $4 billion, but closed at the $5 billion hard cap just three months after an initial close–well in excess of the predecessor fund, SVSS IV, which closed in 2018 at a hard cap of $2.85 billion. Combined with existing portfolios and other recent fundraises (such as last summer’s $1.7 billion Dislocation Fund), SVPGlobal’s total AUM now stands at more than $17.5 billion, making it one of the world’s largest investors in distressed debt and the enigmatically named special situations.
SVPGlobal’s newest fund will focus on opportunities in North America and Europe: continuing what it calls a “three pillar” approach to distressed debt investing that combines aspects of traditional distressed credit and private equity investment strategies across traditional corporate restructurings and special situations.
The firm sources most of the its investments directly, buying debt from banks and other funds. It also takes an active role with most of its invests, often taking controlling equity interests through credit restructurings. The firm has deployed $7.5 billion since the onset of covid-19 in the first quarter of 2020, and has increased its pace of investment in 2021.
“We are grateful for the trust and confidence investors from around the world have placed in our team and time-tested investment strategy,” SVPGlobal Founder and Chief Investment Officer Victor Khosla said in announcing the fund closing. “This successful and expeditious closing of our fifth special situations fund validates the consistency of our approach and our proven record of generating strong returns across market cycles. We are pleased to welcome new investors as we continue to expand our many long-standing relationships.”
Recent investments by the firm in debt-to-equity restructurings of companies in the U.S. and Europe include Swissport International, the largest independent airport services provider and the second largest air cargo company in the world; OmniMax International, the leading U.S. manufacturer of residential roof drainage products. The fund has also reached an agreement (still being mulled by shareholders) with Washington Prime Group, a mall-owning retail REIT hard-hit by the pandemic that has filed for Chapter 11 Bankruptcy, but which may be acquired by SVPGlobal in exchange for debt forgiveness.
