Glenn August, co-founder and president of New York-based specialist asset managers Oak Hill, which has a total of $8bn under management, has been investing in the distressed secutiries market for the past 15 years.
August heads up Oak Hill Advisors, a $4bn securities business investing in distressed debt instruments. His group operates alongside six other platforms within the group, notably Oak Hill Capital, a $1.6bn private equity fund.
In tandem, the distressed debt and the private equity arms of the firm do what August describes as feature in two acts of the distressed investment play: buying impaired debt securities at a discount first before applying the firm's private equity capability as well, typically at the point when the acquired debt is converted into equity, allowing Oak Hill to pursue equity style returns on investment.
August believes that the distressed debt market will provide investors with perennial flow of attractive opportunities, both in North America as well as in Europe, where the absence of a fully fledged high yield market means the road towards value impairment is even shorter for debt issuers in Europe than in the US.
However, in this video interview with PrivateEquityOnline captured at Citigroup's annual Private Equity Conference in Miami, August also points out that distressed investing worldwide has reached a cyclical high: trillions of dollars of corporate debt issued in the late 1990s at the height of the boom is about to come due, a prospect that according to August is certain to present many issuers with the kind of liquidity requirements that Oak Hill and its peers are looking to assist with.