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Barclays spinout Glendon targets up to $2 bln for reserve distressed-debt fund

  • Glendon targets $2 bln for reserve fund
  • First close expected this month
  • Firm formed in 2013 by Barclays executives

Glendon Capital Management, a Barclays spinout that invests in distressed debt, is raising up to $2 billion for a reserve fund that could be activated in a market downturn, a source with knowledge of the process told Buyouts.

Glendon may amass more than $1 billion in a first close later this month, the person said. Senior executives at the firm, which doesn’t appear to have a website, did not respond to connection requests over LinkedIn.

The Santa Monica, California, firm launched in 2013. It’s not clear how much the firm raised for Glendon Opportunities Fund. The firm’s Form ADV attributed about $1.2 billion to its debut fund, out of just over $2 billion in managed regulatory assets as of Dec. 31, 2016. The hard cap on Fund I was $1 billion, Buyouts previously reported. Altogether the firm managed a bit more than $2 billion in regulatory assets as of Dec. 31, 2016.

The firm has discretion over activating the reserve fund based on various triggers, the person said. Park Hill Group is placement agent on the reserve fund; the firm also helped raise the debut fund.

Glendon invests in distressed situations across bank loans, corporate bonds, municipal debt, sovereign debt, asset-backed securities, and equity securities related to debt restructurings and special situations, the Form ADV shows.

The firm was formed by Barclays’s head of distressed debt and special situations, Matthew Barrett, and former managing directors Holly Kim, Brian Berman and Eitan Melamed. Another partner, Michael Keegan, joined in May 2016, according to the Form ADV.

Barrett, Kim and Berman worked at Barclays from 2006 to 2013, according to regulatory filings by Glendon. Earlier they had worked at Oaktree Capital Management.

With a mandate to invest in distressed credit and special situations at Barclays, the team tapped $1.5 billion from the bank’s balance sheet. That figure was later increased to $2 billion.

By the time of the spinout in April 2013, Glendon agreed to wind down the Barclays assets, which totaled about $700 million as of May 2014, according to a separate source.

Action Item: Check out Glendon’s form ADV here: http://bit.ly/2pCn34K

A Barclays sign is seen outside a branch of the bank in London on Feb. 23, 2017. Photo courtesy Reuters/Stefan Wermuth