General Atlantic takes stake in Oak Hill

US buyout firm General Atlantic has acquired a stake in distressed debt specialist Oak Hill Advisors in a further sign of private equity’s appetite for debt investments.

General Atlantic Partners has paid an undisclosed amount for a minority stake in Oak Hill Advisors. Oak Hill’s co-founder, Texan billionaire Robert Bass, has co-invested alongside General Atlantic.

Both parties acquired their stakes from iStar Financial, a commercial real estate firm which invested in Oak Hill in 2005. The firm’s management team has also increased their stake in the business as part of the deal, it said in a statement. 

The deal comes as private equity firms display increasing interest in debt investments. Private Equity International exclusively revealed on Tuesday that AnaCap Financial Partners had agreed to acquire a £122 million (€140 million; $195 million) portfolio of consumer-related debt from Bank of America’s MBNA unit.

Earlier this month, Blackstone Group debt investment subsidiary GSO Capital Partners acquired European leveraged loan manager Harbourmaster Capital, while HIG Capital, which already operates a debt management arm through its Bayside Capital Arm, acquired a portfolio of assets from Dallas-based CLO manager WhiteHorse Capital.

Oak Hill Advisors invests in sub-investment grade corporate credit and distressed situations, and has assets under management of $12.8 billion, according to the statement.

Glenn August, president of Oak Hill, said: “We value the global perspective, experience and relationships that these investors bring to our business.”

General Atlantic chief executive William Ford added: “We have long known and admired Oak Hill Advisors for the strength of its management team and its long term track record of attractive investment performance for its investors.”

Oak Hill, founded in 1980, has raised more than $4 billion of new capital since the start of 2008.

Citi and Morgan Stanley advised Oak Hill on the deal.