William Seibold, a former founding member of Soros Fund Management LLC’s distressed unit, plans to start a fund to invest in troubled European companies.
Recipero Capital will provide capital to middle-market businesses, primarily in Germany, France, Italy and the U.K., starting in the second half of next year, Seibold said in a telephone interview. He expects to have seven people working with him when the fund opens.
Seibold, 50, is currently in discussions with potential investors for early allocations, he said. He is seeking 800 million euros ($1 billion). The firm will be based in Europe.
“The European banking system is in difficulty,” he said. “European businesses, especially in the middle market, are far more heavily financed by banks. The banks need support.”
Hedge funds including Marathon Asset Management LP have also targeted distressed opportunities in Europe. Hedge-fund startups increased in the first half of the year to 549 and industrywide capital rose to a record $2.19 trillion in the third quarter, according to Chicago-based Hedge Fund Research Inc. Distressed hedge funds rose 8.3 percent this year through October, compared with a 2.6 percent gain for all strategies on average, according to data compiled by Bloomberg.
In 2007, Seibold started the now defunct distressed hedge fund Noroton Capital Management LLC, which had been backed by RMF Hedge Fund Ventures, a Man Group Plc fund that provides startup money to new funds. During the financial crisis in 2008, RMF pulled its investment and Seibold was forced to close Noroton and return capital by the end of 2009, he said.
Before Noroton, Seibold co-founded Camulos Capital LP with a former colleague from Soros, he said. Before Camulos, Seibold worked at Soros on the distressed unit from 2002 to 2005. Before Soros, he invested in U.S. and European distressed debt with ING Group in London from 1994 to 1997.