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Wilbur Ross remains king of distressed investing

Wilbur Ross, who was once nicknamed the “King of Bankruptcy,” certainly earned his title with his investment performance — in a good way.

The top performing distressed-focused fund out of a universe of 2,200 private equity funds Buyouts analyzed was the 2002-vintage WLR Recovery Associates II, which is managed by Invesco’s WL Ross & Co. Fund II rang up an internal rate of return of 78.8 percent.

In second place was another fund from 2002, KPS Special Situations II. KPS Capital Partners’ sophomore distressed fund produced an impressive 63.5 percent IRR. Coming in third, was Lone Star Funds and its seventh fund. Lone Star Opportunity Fund VII (vintage 2009) is one of the youngest funds on this list and had an IRR of 52.1 percent.

Placing fourth was yet another 2002-vintage: Oaktree Capital Management’s OCM Opportunities Fund IVb generated an IRR of 46.5 percent.

Rounding out the top five was the 2008-vintage JLL Partners Fund VI, with a 33.6 percent IRR. JLL Partners also came in sixth, with its much older Joseph, Littlejohn & Levy Fund from 1991.

The accompanying table shows the top 20 domestic distressed/turnaround funds by IRR.

Distressed funds typically don’t get as much press as other fund types, but they deliver strong returns. Of the categories included in the median IRR graph, only secondary funds (12.73 percent) and domestic buyouts (11.74 percent) outperform domestic distressed/turnaround’s median IRR of 11.66 percent.

Download Table: Top 20 Distressed Funds

Median IRR by Fund Category