Czech Nets $1.5 Billion For New Direct-Lending Fund

Nov 25 2013 | 2:51pm ET

Former star FrontPoint Partners manager Stephen Czech has won $1.5 billion for his second direct-lending hedge fund.

Greenwich, Connecticut-based Czech Asset Management said that it had closed its SJC II fund, doubling its assets under management to $3 billion. Czech said it had sought only $1 billion for the fund. Investors sought to put $1.8 billion, but it was hard-capped at $1.5 billion—the same size as the existing SJC Direct Lending Fund, which Czech raised while still at FrontPoint.

SJC I has produced annualized returns of 11.5% since its debut in 2010.

"U.S. middle-market businesses continue to have relatively few quality financing sources as numerous middle market direct lenders have either exited the direct lending business, gone 'down-market' towards smaller borrowers or are gravitating towards larger borrowers for both strategic and regulatory reasons," Czech said. "We plan to continue to fill that void for creditworthy businesses in need of secured floating rate debt that is required to expand their businesses and increase their hiring."

In addition to its own $3 billion, CAM has $1.2 billion in co-investment capacity.

Czech's second fund is backed by the likes of Michigan and South Carolina's public pension funds.

Czech spun his direct-lending fund off from the failing FrontPoint in 2011, just months before the one-time hedge fund giant went out of business in the wake of an insider-trading scandal.


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