Blackstone Buys Stake in Pucillo’s Solus Event-Driven Hedge FundKatherine Burton
Blackstone Group LP bought a stake in Christopher Pucillo’s Solus Alternative Asset Management, paving the way for the exit of two of the hedge fund firm’s founding partners.
The sale allows Nick Signorile and Chris Bondy to “monetize their ownership stake in the firm and begin a transition process,” said Pucillo in a letter to clients. Signorile and Bondy will remain at the $5.7 billion Solus “over lengthly transition periods,” he added.
The transaction is the second of its type for Blackstone, which has raised more than $3 billion to buy stakes of 15 percent to 25 percent in established hedge funds. Tom Hill, head of Blackstone’s hedge fund business, is targeting firms like Solus whose founders are seeking to cash out, plan for succession or buy out seed investors. Blackstone’s first deal was with Senator Investment Group, a fund it had provided with start-up money.
Solus focuses on event-driven, distressed and special situation investments, including trading in the securities of bankrupt companies. The firm was founded in 2007 by Pucillo, who spun out the hedge fund group from Stanfield Capital Partners. He was previously a loan trader at Morgan Stanley.
The New York-based firm’s main fund has returned 21.1 percent a year on average, according to an investor who asked not to be named because the fund is private. Solus has been expanding and in 2012 hired Scott Martin and C.J. Lanktree as money managers. They were former co-heads of distressed products at Deutsche Bank AG.
The hedge fund has recently made money in the bankruptcy claims of Lehman Brothers Holdings Inc. and is currently involved in the reorganization of LightSquared Inc.
All proceeds from the Blackstone deal received by partners other than Signorile and Bondy will be reinvested in Solus funds and locked up for several years, Pucillo wrote in the letter.