Centerbridge seeks up to US$5b for fourth debt fund

[NEW YORK] US private equity firm Centerbridge Partners is seeking to raise up to US$5 billion for its fourth private credit fund, two people familiar with the matter told Reuters on Thursday.

The fund will seek to snap up corporate debt that is trading at a discount to its face value. The fundraising began in January with a goal to secure between US$4.25 billion and US$5 billion in commitments from investors, the sources said.

Centerbridge declined to comment. Its most recent debt fund raised more than US$4 billion several years ago.

Centerbridge's credit funds have historically purchased the debt of troubled companies that are often heading toward bankruptcy proceedings. The latest fund will not initially focus heavily on such distressed debt, as there are only few major companies in deep financial trouble at this point in the economic cycle, one of the sources said.

Nevertheless, Centerbridge's fundraising comes amid widespread concerns that the US economy, which has been on its longest expansion in history, may soon enter a recession.

An economic downturn can make it more difficult for companies, especially those rated "junk" by credit rating agencies, to borrow money. This can create opportunities for credit specialists such as Centerbridge to buy debt at rock-bottom prices, and reap returns when a company's prospects improve or through transactions such as debt restructurings that give them ownership of a company.

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Founded in 2005, Centerbridge has about US$27 billion in assets under management. Its portfolio companies include Ligado Networks, a Reston, Virginia-based wireless satellite provider, and home healthcare company Civitas Solutions.

REUTERS