Allegro eyes $300m haul for latest special sits fundraise – exclusive

The special situations manager has secured commitments from mostly offshore LPs such as funds of funds, European family offices, and US and Asian endowments.

Turnaround specialist Allegro Funds is set to hold a final close on about A$390 million ($300 million; €260 million) for its latest vehicle and co-investment sidecar, Private Equity International has learned.

The Sydney-based manager launched Allegro Fund III in July this year and held a first close on its A$250 million target in seven weeks. Fund III is understood to have a hard-cap of A$290 million.

Along with the main fund, Allegro is also raising a committed sidecar vehicle of which close to A$100 million of capital commitments has already been reached, Chester Moynihan, Allegro founding partner, told PEI.

“The sidecar gives us committed capital to access slightly larger investment opportunities, deploying A$50 million equity into any one deal,” Moynihan said. “Given our strategy which is turnaround and distressed it’s harder to organise co-investments in those types of deals; we need to underwrite deals pretty much from day one and move quickly with our LPs, finding the most convenient way to access these opportunities.”

Capital raised from Fund III will follow the same strategy as its predecessor, specialising in distressed and turnaround investments in Australian and New Zealand businesses. The firm will deploy between A$10 million and A$50 million per transaction, with the option for larger deals via its sidecar vehicle.

Sixty percent of the capital from Fund III has come from offshore limited partners such as global funds of funds, financial institutions, European family offices, as well as US and Asian endowments. The remaining 40 percent of commitments was contributed by Australian superannuation funds and financial institutions, Moynihan said.

Investors in Allegro’s previous funds include Vantage Asset Management, Vision Super and WA Local Government Superannuation Plan, PEI data show.

The firm raised A$180 million of equity in June 2015 for its second fund and has been fully invested across eight portfolio companies: Terrex Seismic, Healthy Life, Great Southern Rail, Carpet Court NZ, Custom Bus, Pizza Hut Australia, Experience Australia and JSW.

Allegro was founded in 2004 and manages more than A$1.1 billion of assets.