MatlinPatterson finds $1.6bn for Fund II

The New York-based distressed specialist will target opportunities in an environment marked by a lower default rate.

MatlinPatterson Global Advisors has reached a final close on its second control-oriented distressed fund, rounding up a total of $1.665 billion (€1.3 billion), according to a source.

 

The New York firm, which scours for distressed debt around the world, faces a different market from when the firm spun out of Credit Suisse First Boston two years ago. MatlinPatterson closed its debut fund in 2002 on $2.2 billion. At the time, the default rate in the US was near 16 percent. Now that rate hovers near 2 percent.

 

A source close to the firm said MatlinPatterson will see “zero change in strategy” and that there still exists a robust flow of distressed opportunities across the globe. The firm has been active recently in Canada, Thailand, Indonesia and Argentina.

 

MatlinPatterson was founded by David Matlin and Mark Patterson, two former distressed specialists within CSFB. Their debut fund had a significant amount of capital from CSFB internal funds, partners, and affiliated private banks.

 

The fund just closed has a number of new limited partners, including corporate and public pensions, but not every LP from the debut fund re-upped, according to the source. Fund I has to date returned more than $1.1 billion to its limited partners, the source said.

 

Placement agent Atlantic-Pacific Capital, which raised MatlinPatterson’s debut fund, was hired for the most recent effort.

 

The fund has a three-year draw-down period and a four-year investment period. It has already invested $300 million.