News & Analysis

Alchemy nears £150m first close for distressed debt fund

The London-based buyout firm is nearing a first close of a new fund targeting £250m for distressed opportunities in Europe.

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Alchemy Partners, a UK private equity firm, is nearing a first close of its Alchemy Special Opportunities Fund, which launched at the end of May with a target of £250 million (€368 million).
 
Ian Cash, formerly the co-founder of the global special situations group at Mizuho International, joined Alchemy in May to head up the new distressed debt fund.
 
Cash said that the fund, which has a hard cap of £300 million, is likely to raise between £150 million and £170 million for its first close at the end of September with a final close expected by year end.
 
“The core strategy of the fund is to invest in the debt layer of distressed situations in Europe, with a targeted hold of between one and three years, which is our sweet spot,” said Cash.
 
Fundraising is currently “on target” said Cash, with cash being raised through a combination of Alchemy’s existing investor base and those on the waiting list for the Alchemy Plan, Alchemy Partner’s fund structure, which has a £400 million per annum indicative capacity and to which investors commit a minimum of £5 million on a rolling 12-month basis.
 
Investors in the Alchemy Plan are roughly split 55:45 between the US and Western Europe and Cash said that the investor base for Alchemy Special Opportunities would be similar.
 
Cash said that Alchemy Partners is confident of the potential for distressed opportunities in the coming years: “We’re not predicting a huge bubble burst. There’s been an extremely good run of an increasingly liquid debt market with growth in average debt leverage to between 6 and 6.5 according to Standard & Poor’s. There has been very low default rates but we see a gradual return to average default rates of three to five percent which will create a very large distressed opportunity in Europe.”
 
Cash was at Salomon Smith Barney and Citibank International before joining Mizuho International in 2002. Frits Prakke, the head of European high-yield capital markets at Bank of America, will join Alchemy Partners at the end of August to work alongside Cash.