Redwood Said to Follow Gramercy in Setting Up Argentina FundKatia Porzecanski
Redwood Capital Management LLC, a $6.7 billion hedge fund that focuses on distressed debt, started a fund last week to invest in Argentine assets, according to a person familiar with the matter.
The $160 million fund, which can hold the assets of any entity with the majority of its operations in the South American nation, was the result of an inquiry by a small group of investors, said the person, who asked not to be identified because the information is private. The Redwood Argentina Fund started Oct. 20 and is the first fund to specialize in a specific theme for the Englewood Cliffs, New Jersey-based company, said the person.
Redwood joins Gramercy Funds Management LLC, Owl Creek Asset Management LP and Bienville Capital Management LLC in recently starting funds that specialize in South America’s second-biggest economy. In July, Argentina defaulted on its overseas bonds after a U.S. court blocked debt payments until a group of investors from the nation’s previous default in 2001 is paid in full.
The fund is managed by Redwood partners Jonathan Kolatch and Ruben Kliksberg, the person said. Steven Siegler, the company’s head of investor relations, declined to comment.
Kolatch said at the Ira Sohn conference in May 2012 that his fund liked Argentina’s euro-denominated discount bonds maturing in 2033. Prices on those securities have gained 53 percent since his comments.
Last month, Gramercy started its second Distressed Argentina Fund to meet investor interest. The fund oversees $175 million and will invest in sovereign and quasi-sovereign debt, a person familiar with the fund said last week.
Despite the default, Argentine assets have returned 17 percent to investors this year on wagers President Cristina Fernandez de Kirchner’s successor will resolve the legal battle with the holdouts, led by billionaire Paul Singer’s Elliott Management Corp. Fernandez’s second term will end in 2015.
“Argentina’s problems are solvable,” Cullen Thompson, the president of Bienville, which launched its Argentina fund in July, said at a conference last week in New York. “Cristina’s model has been discredited, and we have the mandate for change.”
The Global X MSCI Argentina ETF, which has Tenaris SA, MercadoLibre Inc. and YPF SA as its largest holdings, has gained 0.2 percent this year to $19.59.
Redwood is part of a group of investors that includes Perry Capital LLC and Knighthead Capital Management LLC, which hold Argentina’s euro-denominated bonds and have challenged the U.S. court ruling.
The group also sued Bank of New York Mellon Brussels and Euroclear Bank SA in Belgium, seeking a permanent order to require the intermediaries to pass along payments made by Argentina, as well as a declaration that the order barring them from doing so is unenforceable.