Anchorage Capital has held a final close on its second private equity fund at A$250 million ($259 million), which is aimed at special situations and turnaround deals in Australia, New Zealand and Southeast Asia.
Anchorage Capital Partners II is the follow-on vehicle to the Sydney-based firm’s flagship fund, which closed at A$200 million in 2010. Fund II, which was oversubscribed, was capped at A$250 million, with the capital-raising process taking only about six months.
Half of the assets in Fund II came from Australian-based investors and are largely fund-of-funds and superannuation funds, according to Simon Woodhouse, partner at Anchorage. Overseas institutional investors from Asia, Europe and the US account for the remainder.
Macquarie Group is reportedly an anchor investor in Fund II. Former Macquarie chief executive Allan Moss is a special adviser to Anchorage’s investment committee.
Anchorage focuses on the middle-market, specialising in operational turnarounds through the acquisitions of majority stakes in businesses with enterprise values of between A$50 million and A$250 million.
It targets companies “where we can materially improve the financial performance of the business, and the underlying business itself”, Woodhouse tells AsianInvestor.
Fund II has no set allocation to Southeast Asia, he notes. Of the six investments that have been made from Fund I to date, just one is from the sub-region: last year’s acquisition of Singapore-based First Engineering, a manufacturer of precision plastics components, for an undisclosed sum.
In the turnaround and special situations space, there is “a very healthy pipeline of deals driven by underperformance”, says Woodhouse, adding that the firm is not targeting specific markets or sectors.
The distressed private equity space – which encompasses distressed debt, turnaround and special situations deals – is niche, but has retained strong investor interest due to returns that are on average higher than buyout funds, according to Preqin.
The data provider’s recent survey of institutions that invest in private equity found that 23% planned to invest in distressed PE funds this year.