Merchant Asset Partners seeks £500m for turnarounds

The nascent UK-based firm expects to hold a first close for its debut fund in autumn, as it gears up to take advantage of the ‘perfect storm of market distress’ in which companies have either over-borrowed or strayed from their areas of core competency.

Merchant Asset Partners (MAP), a firm formed in 2007 specifically to take advantage of opportunities arising from the current economic climate, is raising up to £500 million (€536 million; $731 million) from institutions and family offices for its debut vehicle. It expects to hold a first close in autumn this year.

The UK is currently experiencing a “perfect storm of market distress” in which companies have either over-borrowed or strayed from their areas of core competency, says the firm’s website.

The three founders of MAP comprise David Buchler, a former president of the Association of Business Recovery Professionals and ex-European chairman of Kroll, the security risk consultancy business; Philip Aaronberg, the founder of corporate finance boutique Alberdale and a 16-year Arthur Anderson partner; and Nicholas Lyons, the former head of UK & Nordic institutions within JPMorgan Chase’s private fund group.

Lyons, the partner who heads up MAP’s strategy, syndication and marketing, said that, rather than being a “first-time fund”, the vehicle should be considered a “one-time fund”.

“One of the key issues for traditional private equity firms is that the founders end up running financial institutions,” said Lyons in an interview, “We don’t want the pressure of having to exit investments after two or three years in order to raise the next fund.”

MAP is targeting a return in excess of three times investors’ capital, which will be invested primarily in UK-headquartered companies with international operations.

The fund, which will have a seven-year life, will look to deploy capital in a period of between 18 and 24 months in seven to 10 investments.