Florham Park, New Jersey-based GSC Group has closed its third control debt fund on $530 million (€399 million). The fund will acquire loans, bonds and mezzanine debt of distressed companies.
GSC Recovery III will target the US middle-market manufacturing and service sectors, purchasing debt position that will convert to equity upon restructuring. The fund is looking for distressed companies with an enterprise value between $100 million and $1 billion and has already made its first investment.
“We like to focus on companies that have a good business plan, but have gotten themselves into a financial problem,” says Carl Crosetto, a managing director at GSC. “We don’t look at broken companies. We look at broken balance sheets.”
GSC has committed $50 million in capital to the fund, according to a statement. Crosetto said most LPs returned to the fund, in addition to commitments from new investors.
The firm is confident about the opportunities in the turnaround sector. “The availability of high-yield debt certainly points out that sooner or later something will happen,” says Crosetto.
GSC raised similar a fund in 2000 on $307 million and follow-on in 2002 on $414 million. The firm’s initial turnaround debt fund was launched in 1998. In July of last year, the firm closed a control debt hedge fund on $81 million.