Centerbridge Partners' second flagship fund is substantially oversubscribed and expected to hit its hard-cap of $4.25 billion, according to a person with knowledge of the situation.
The fund, which began marketing in July 2010, had a target of $3.75 billion. Fund II is expected to hold a final close in May, another source said. Centerbridge declined to comment.
Centerbridge Partners II held a first close in November on more than $1 billion, and had collected around $2.5 billion by the end of the year. The firm, formed in 2006, raised $3 billion for its debut fund in 2006.
That fund was generating a 1.26x total value multiple and a 17.5 percent internal rate of return as of 30 September, according to performance information from the Oregon Public Employees Retirement Fund.
Along with solid performance, limited partners like the firm’s “flexible” investment focus, which allows Centerbridge to target distressed opportunities and more traditional private equity buyout investments.
“It’s a strategy that’s relatively flexible depending on where the opportunities are,” the person with knowledge said.
The firm also avoided “strategy drift”, according to the market source.
“[Investors] put money with the fund with certain expectations and those expectations were met,” the source said. “And the track record proved the strategy made sense.”
The firm was formed in 2006 by Mark Gallogly, a former Blackstone executive, and Jeffrey Aronson, a former distressed securities expert from hedge fund Angelo Gordon.