Polygon Global Partners LLP, a money manager overseeing $10 billion, will focus mostly on European companies as it starts raising its first fund to invest in distressed assets.
Polygon, founded in 2002 by Reade Griffith and Paddy Dear, received initial capital this month for the pool from its owner Tetragon Financial Group Ltd. (TFG), which plans to increase its investment, according to London-based Olivier Blechner, who manages the fund.
Polygon is seeking to provide financing to companies struggling to meet the terms of their debt as the region’s economy emerges from a record-long recession. The European Union offers one of the best investment opportunities according to 34 percent of the respondents to a Bloomberg Global Poll, up from 18 percent in May and the most since that question was first asked in October 2009.
“We are seeing a 10-year corporate distressed debt cycle in Europe and our strategy is to participate in the restructuring and provide funding for companies,” Blechner, who joined Polygon in May from Alden Global Capital Ltd., said in a telephone interview. Polygon will provide funding for companies through an overhaul of their balance sheets, he said.
Ten speculative-grade companies defaulted on 8.7 billion euros ($12 billion) of debt in the second quarter, Standard & Poor’s said in a Sept. 9 report, with France and the Netherlands registering increases.
“A notable feature of recent defaults is the high proportion of companies defaulting for a second or third time,” S&P credit analyst Paul Watters wrote in the report. “This is a key reason why the current default cycle is proving to be so protracted.”
Since the start of 2011, 44 percent of defaults are from companies that failed to meet their debt obligations more than once, according to S&P.
Gross domestic product in the 17-nation euro area rose 0.3 percent in the April-June period after a 0.3 percent contraction in the previous three months, the European Union’s statistics office in Luxembourg said Aug. 14. That brought to an end a period of six straight quarters of contraction, the longest slump since the euro’s debut in 1999.
The Polygon fund, which won’t focus on taking control of a company through acquiring their debt, may be open to take other investors later, Blechner said.
Event-driven funds focusing on distressed restructuring generated a 8.5 percent return this year, and 14.3 percent in the past 12 months, according to an index tracked by the Hedge Fund Research Inc.
The number of companies seeking protection in Spain from creditors increased by 26 percent this year through August compared with the same period in 2012, according to a report published Sept. 5 by Informa D&B.
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