BY SABRINA WILLMER
Bayside Capital, the credit affiliate of private-equity firm H.I.G Capital LLC, is seeking $1 billion for a U.S.-focused distressed loan fund, according to a fund document viewed by Bloomberg News. H.I.G. Bayside Loan Opportunity Fund IV LP will mostly invest in stressed or distressed existing senior debt of companies facing default or a balance sheet restructuring, according to the document. The fund will invest in U.S. small cap companies with less than $350 million in enterprise value. Institutional investors, including public pension plans, are turning to loan funds in search for yield amid record-low interest rates. The Orange County Employees Retirement System may reach its goal of investing 4 percent of assets in direct loans to mid-sized companies in a year, said chief investment officer Girard Miller, in a July 24 telephone interview.
“Everyone in the market is searching for yield, which means that there’s a lot of competition now even in this middle market area, which even a year or two ago was kind of virgin territory for a lot of people,” he said. John Bolduc, executive managing director of Miami-based Bayside Capital, didn’t respond to a phone call or an e-mailed request for comment. More than a year ago, Bayside raised $1 billion for H.I.G. Bayside Loan Opportunity Fund III LP, which mostly invests in existing distressed senior debt of small European companies.
Bayside formed that fund when its 2010 pool met its limit for investing outside of the U.S., according to the document. The 2010 fund raised $1.1 billion to invest in both North American and Western European companies. Bayside’s U.S. investments generated a 17.7 percent net internal rate of return and a 1.6 times multiple at end of December, according to the document. Bayside, which manages more than $4.5 billion of H.I.G.’s more than $15 billion in assets under management, invests in middle-market companies across the primary and secondary debt capital markets, according to the firm’s website. The team has eight offices in the U.S. and Europe with more than 250 investment professionals. H.I.G. Capital, which is based in Miami, was founded in 1993 by Sami Mnaymneh and Tony Tamer.
This article was taken from the Bloomberg Brief Private Equity Newsletter.