Morgan Stanley, LGT Said to Lead Newport Global Fund Restructure

  • Firms to offer existing fund backers option to cash out
  • Houston-based NewPort raised investment pool in 2006

Part of the alternative investment arm of Morgan Stanley is leading the restructuring of a fund managed by distressed credit investor NewPort Global Advisors LP, said people familiar with the matter.

The bank’s secondaries team, which is partnering with LGT Capital Partners AG, has agreed to buy out existing backers in NewPort’s pool, which was raised in 2006, said the people, who asked not to be identified because the information is private. The deal, which values the fund’s assets at about $500 million, is expected to complete by year-end, they said.

NewPort, which is being advised by UBS Group AG, was one of several managers hit by the collapse of Lehman Brothers Holdings Inc. in 2008. The Houston-based investor was a client of its prime-brokerage arm, which cleared trades and provided loans to credit and hedge funds, and was unable to pull its assets before the bank’s collapse. The result hurt the fund’s return performance, the people said.

Under the terms of the deal NewPort will transfer the fund’s assets -- primarily loans to companies in financial distress -- into a new fund, with existing backers offered the opportunity to sell out or roll over in the new vehicle, said the people. That will allow the manager more time to exit positions, they said.

Spokesmen for Morgan Stanley and UBS declined to comment. Spokesmen for NewPort and LGT did not respond to e-mail requests seeking comment.

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