New York-based Greylock Capital Management is readying a pair of emerging markets high-yield debt funds as it weathers the economic storm.
The $400 million firm is marketing its Africa Opportunity and Latin American Opportunity funds, looking to hold a soft close of between $50 million to $100 million for both private equity vehicles in the first quarter of 2009. A final close will be held a year later, according to Ajata Mediratta, senior managing director. Greylock is looking to raise between $200 million to $300 million for both offerings, which are set to launch in January.
Mediratta, a former Bear senior managing director who joined Greylock in June, said he thinks the funds can achieve equity-like returns in the neighborhood of 20% to 25% annually over the course of the funds’ seven-year life cycles.
The firm is in talks with regional pension funds that want to stay local and are just starting to invest in alternatives about the new offerings. Mediratta said that the firm’s lead investor is the Overseas Private Investment Corp., which helps U.S. businesses foster economic development in new and emerging markets, giving institutional investors a degree of comfort.
By the same token, Mediratta added that many of Greylock’s prospective investors are currently quitting strategies that have failed them and are making reinvestment decisions for January, “so we have to be patient with them while they deal with their own problems.”
The firm is hoping that its new offerings will outperform its $180 million flagship Greylock Global Opportunity Fund, which is down 7.4% through September, according to public databases.
“Emerging markets are taking a pounding now so we’re taking lumps, but we haven’t been hit as bad as some of the others because we don’t use leverage,”said Mediratta.