Unigestion, a US$11 billion fund of funds shop, has launched the Distressed Hybrid Fund of Funds to exploit the credit crisis via private equity and hedge fund managers.
The new fund will seek to gain exposure to distressed strategies such as consumer and commercial credit, corporate loans, mortgages, high-yield debt, distressed private equity, mezzanine and distressed real estate. The fund will offer investors a concentrated portfolio with exposure to 10 to15 funds.
The global repricing of risk, increased credit spreads and rising default rates are strong indicators of a new distressed cycle, according to the firm. Securities related to the collapsing mortgage market already exhibit highly distressed prices and over the next 18 to 24 months, the market dislocation is expected to impact the U.S. corporate market, followed by the European markets, real estate and finally p.e. deals worldwide.
A key feature for investors is that 50% of the portfolio is expected to be liquid within three to four years, as opposed to the industry standard 10-year lockup period in typical p.e. funds.
The fund will be capped at US$750 million with US$250 million for direct co-investments.
The minimum investment for institutional investors is US$10 million and US$1 million for individual investors.