3 Degrees launches first private equity fund

Singaporean hedge fund manager 3 Degrees Asset Management has launched its first private equity-style fund targeting $250 million. It has hired Michael Gilmore from Nomura Securities.

3 Degrees Asset Management, a hedge fund manager with a focus on distressed debt and special situations, has launched its first private equity distressed debt fund, ADF Special Opportunities (ASO).

The firm has also hired Michael Gilmore as a managing principal. Gilmore joins 3 Degrees from Nomura Securities, where he was head of Asian Consumer and Media Research, before which he held the same position at UBS. In all, he has spent 12 years working as a sell-side Asian equities analyst.

At 3 Degrees, he is a portfolio manager of the new fund and sits on the firm’s investment committee and oversees daily operations.

Gilmore told PEO that ASO is a sector agnostic fund, and that “the investment style is focussed on entry point, revaluation event, exit style, and investment structure, not sector.”

It is the first time the firm has raised funds using a private equity structure, Gilmore said. The investment style will be similar to that of the firm’s previous fund, “which although it is a hedge fund, shares many strategy characteristics with PE funds,” he said. The firm currently manages the Asian Debt Fund, a hedge fund launched in 2004 that has $380 million under management.

Gilmore said: “The investment strategy can be separated into control and non-control investments. We make non-control investments with the intention of exiting at the time of restructuring, or other revaluation event, whereas we hold control investments through the restructuring process with the intention of gaining operational control and effecting turnaround. This has been the strategy at ADF, but the capital structure at ASO will be more optimal for this longer-term, higher exit multiple strategy.”

The fund is looking to raise $250 million (€159 million). Gilmore said that fundraising is currently on and the firm expects a first close in the last quarter of this year, and a final close in mid-2009.

3 Degrees Asset Management was established in 2002.