17/08/2011 Author: Tony Griffiths

Marathon launches new European distressed offering

Marathon Asset Management, the New York-based hedge fund giant with assets topping $10bn, has launched a new European distressed credit fund that is expected to reach $1bn in AuM by the end of the year, HFMWeek can exclusively reveal.   

The new vehicle, the Marathon European Credit Opportunity Fund, was launched on 2 August, SEC filings show. An initial close is due 30 September, with a second on 30 November.   

A source with knowledge of the situation told HFMWeek that the fund currently has $100m in AuM and further soft commitments that will take it to around $500m at the end of the first close. The source also suggested Marathon was confident assets would reach $1bn by year-end.

“Given the headlines that have been going on surrounding Europe it’s no surprise that there’s been interest in this,” the source said. “Investors are trying to figure out what to do, whether to make a play or to sit it out.”

European distressed credit has become a focal point for investors throughout 2011 as concerns surrounding debt levels at a number of members of the EU’s Eurozone continue to spook the market.

Four Eurozone countries – France, Italy, Spain and Belgium – implemented temporary short-selling bans last Thursday night following two weeks of exacerbated market volatility, in part attributed to euro-related unease. The bans follow a similar measure taken by Greece the week previous.

According to the source, the creation of the new fund – Marathon’s seventh – followed requests earlier this year for increased exposure to Europe from a number of large investors in the firm’s flagship fund.

The main fund is currently believed to be about 25% exposed to Europe and could rise to 50%. Several large US and Canadian public pension funds, as well as a handful of corporate pension funds and family offices, however, expressed an interest in 100% exposure, paving the way for the new venture.