MatlinPatterson Global Advisers is raising money to invest in Puerto Rico, the beleaguered commonwealth that’s attracting debt investors wagering on a rebound.
The firm, which oversees $7.5 billion, has invested about $150 million in the island, according to a person with knowledge of the matter, who asked not to be named because the information is private. The New York-based firm is raising cash for a standalone strategy for investments in the island, after first making forays into Puerto Rico debt two years ago.
MatlinPatterson is expanding its involvement as the island’s financial woes pile up. Poorer than the poorest U.S. state, Mississippi, and with $72 billion in debt, Puerto Rico is drawing the interest of firms including Fir Tree Partners, Knighthead Capital Management, D.E. Shaw & Co. and Canyon Partners, which believe they can profit from helping the commonwealth restructure debt and turn around its economy.
A spokesman for MatlinPatterson declined to comment on fundraising.
Michael Lipsky, a partner at MatlinPatterson who specializes in distressed investments, oversees the firm’s Puerto Rico strategy.
“Some of the island debt has to restructure,” he said in an April interview. “The beautiful thing about Puerto Rico is that there’s something for everyone.”
Puerto Rico’s troubles have pitted some vulture firms against each other. Creditors holding Puerto Rican general-obligation and tax revenue bonds want Congress to permit government entities like the Puerto Rico Electric Power Authority, known as Prepa, to seek protection from creditors in bankruptcy court. Prepa’s bondholders disagree, preferring to follow bond covenants to negotiate directly with the agency.
MatlinPatterson, which manages money through hedge funds and private equity, has invested in both general-obligation and Prepa bonds, in addition to credits issued by other Puerto Rican entities, said the person. The firm’s investments are split between separately managed accounts devoted to Puerto Rico and its main global fund.