Ex-Icahn Employee Now Rival Rachesky Said to Raise $1.3 Billion

MHR Fund Management LLC, the investment firm co-founded by Mark Rachesky that battled Carl Icahn over the leadership of Lions Gate Entertainment Corp., has gathered almost $1.3 billion for its latest distressed fund.

The firm has spent more than a year marketing MHR Institutional Partners IV LP and is seeking as much as $3.5 billion, according to two people with knowledge of the situation. The private-equity fund will take controlling stakes in middle-market companies, said the people, who asked not to be identified because the information is private.