LPs stampede new hybrid fund

Centerbridge Capital, the new private equity/distressed firm formed by Blackstone vet Mark Gallogly and Angelo Gordon vet Jeffrey Aronson, has already received more than $2 billion in interest from limited partners.

Centerbridge Partners, hybrid private equity fund to be managed by two high-profile alternative investment veterans, has already drawn more than $2 billion (€1.6 billion) in limited partner interest, according to an LP source.

New York-based Centerbridge Capital was founded late last year by Mark Gallogly, the former head of The Blackstone Group’s private equity programme, and Jeffrey Aronson, the former head of distressed securities at private fund giant Angelo Gordon.

According to the source, Centerbridge Partners has a target of $2.5 billion. The fund’s placement agent is Park Hill Group, which is affiliated with The Blackstone Group. Drumming up investor interest has not been difficult, the source said. Park Hill is “directing traffic” and arranging meetings for the many LPs who want to commit to the new vehicle.

Centerbridge Partners will combine traditional private equity with distressed investment strategies, and invest opportunistically in all parts of a company’s capital structure.

Among niche strategies, distressed investing is currently very popular with limited partners.

By combining a distressed expertise with more straightforward private equity skills, Centerbridge is presenting itself to LPs as sidestepping dependence on market cycles. Distressed funds have commonly been viewed as heavily cyclical. The firm is touting its ability to work with management and approach companies on a micro level, while also understanding markets and being able to execute trades where opportunistic.

If Centerbridge surpasses its $2.5 billion target, the fund will be among the largest first-time vehicles ever raised. Another notable debut fund was that of Menlo Park-based Silver Lake Partners, which quickly raised $2.2 billion in 1999, thanks to its tech buyout focus and lineup of seasoned private equity pros.

Gallogly stepped down from Blackstone last year amid plans to form a new firm with his friend Aronson, who while at Angelo Gordon oversaw a $2.5 billion distressed securities programme.