Neuberger, HarbourVest plot war chests for debt

Two significant players will court investors for London-listed funds that will focus on debt opportunities.

Asset management firm Neuberger Berman will try to raise more than $150 million to invest in “stressed, distressed and special situation investments in credit-related products”, the firm said on Monday.

The firm will raise the money via a joint listing on the London Stock Exchange’s specialist fund market and the Channel Island Stock Exchange.

The increased supply of distressed debt and rising default rates have created a “compelling investment opportunity” said the firm. “We believe that we are still in the early days of this opportunity,” said managing director Michael Holmberg in a statement.

If the capital raising is successful, NB hopes to deploy the capital quickly, investing one third of the money within the first three months and being fully invested within nine months. It will target between 40 and 50 holdings.

NB’s announcement follows a similar launch earlier this month from private equity investment firm HarbourVest Partners, which will also try to tap London’s specialist funds market for up to £100 million (€113 million; $155 million) for HarbourVest Senior Loans Europe, a vehicle to invest in senior secured loans of up to 30 European small- and mid-market private equity-backed companies.

Unlike Neuberger Berman’s vehicle, HSLE is not a distress play; it will target performing loans on both a primary and secondary basis. “Fundamentally this is very vanilla and simple: we are providing loan capital alongside, in partnership – not competition – with the banks to middle-market or small-cap European business, says Alex Rogers, HarbourVest managing director.