CarVal targets $2 bln for fourth Credit Value fund

CarVal Investors is in market with its fourth credit fund, targeting $2 billion with a $3 billion hard cap, two people with knowledge of the process told Buyouts.

CVI Credit Value Fund IV is fundraising now, the people said. The Credit Value funds focus on distressed credit across loan portfolios, corporate securities, structured credit and liquidations in the middle to upper market.

Fund IV is led by a new generation of managers, who moved into key leadership roles last year after President and Chief Investment Officer John Brice left CarVal.

Brice’s responsibilities were taken over by CarVal Managing Principals Jody Gunderson, Lucas Detor and James Ganley. The three previously were executive managing directors at the Minneapolis firm.

The departure of Brice, along with Chief Financial Officer Peter Vorbrich last year, triggered a key-man provision in the third fund, sources previously told Buyouts. LPs chose to allow Fund III to continue investing, a market source said.

Fund III closed in July 2015 on $3 billion, 50 percent above its $2 billion target. Fund III was generating a 13.7 percent IRR and a 1.12x multiple as of Sept. 30, 2016, performance information from Florida State Board of Administration shows.

Fund III is weighted toward loan portfolios, but balanced with corporate securities and structured credit “as the recovery ends and the dislocation of the next market cycle begins,” Brice said in a statement when the fund closed.

CarVal raised its first fund open to outside investors, Global Value Fund, in 2007 with $5.4 billion, a Fresno County Employees’ Retirement Association investment report says. That fund was generating a 21.7 percent internal rate of return and a 2.29x multiple as of Sept. 30, 2016, according to Florida SBA.

The firm launched its first Credit Value Fund in 2010 and its second fund in 2012. CVI Credit Value I was generating a 20.4 percent IRR and 2.16x multiple as of Sept. 30, 2016, Florida SBA performance information says. Fund II was producing a 8.3 percent IRR and 1.26x multiple as of that date.

Agribusiness giant Cargill launched CarVal in 1987 as its trading unit. In 2006, CarVal became an independent entity.

Action Item: Check out CarVal’s Form ADV: http://bit.ly/2oTtvF7

A Cargill logo is pictured on the Provimi Kliba and Protector animal nutrition factory in Lucens, Switzerland, on Sept. 22, 2016. Photo courtesy Reuters/Denis Balibouse