Catalyst Set to Start $1.25 Billion Fund in Early 2015

Catalyst Capital Group Inc., Canada’s second-largest private-equity firm, is planning to raise $1.25 billion for its fifth and largest fund next year, people with knowledge of the matter said.

The firm, which manages about $3 billion in assets, is looking to formally start the fund early in 2015, said the people, who asked not to be identified because the information is private. Fund V will target a net internal rate of return of 20 percent to 25 percent, the people said.

Catalyst’s new fund will focus on control and influence investing in Canada, providing operational, turnaround, financial and strategic expertise, the people said. Special situations funds typically make distressed and event-driven investments, taking advantage of price disparities, complex situations and troubled assets. They often invest across capital structures, such as various types of debt and equity.

The Toronto-based firm, run by Newton Glassman, has held preliminary talks with existing and potential investors, known as limited partners, the people said. Greenwich, Connecticut-based Atlantic-Pacific Capital Inc., which has worked with Catalyst on two previous funds, will act as the exclusive global placement agent for the new one, they said.

Catalyst’s two previous funds raised about $1 billion. Fund IV closed at $812 million initially before its limited partners added another $200 million.

As of September, Catalyst’s Fund II and Fund III were ranked in the first quartile of performance against U.S. distressed private-equity funds of their respective vintages, according to Preqin Ltd., a research firm based in London.

Catalyst’s Fund I ranked in the second quartile, Preqin data show. Preqin doesn’t have quartile rankings for Fund IV, which started in 2012, Helen Kenyon, a spokeswoman for Preqin, said in an e-mail.

The research firm doesn’t disclose the funds’ individual internal rate of return, she said. Catalyst hasn’t disclosed performance figures this year.

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