Bain's Sankaty Is Said to Get $2.1 Billion for Credit Fund

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  • Joins Oaktree, Apollo, Ares in preparing for distress cycle
  • Firm expects challenges in energy, shipping and commodities

Bain Capital’s credit investment arm, Sankaty Advisors, has gathered $2.1 billion in an initial phase of capital raising for a global debt fund as it prepares for a new cycle of defaults.

The Boston-based firm is seeking as much as $3.5 billion for Sankaty Credit Opportunities VI and is 70 percent to its $3 billion goal, people with knowledge of the process said, asking not to be identified because the details aren’t public. Sankaty’s dealmakers see several industries facing challenges, including energy, shipping, media, metals and mining, according to a letter sent to investors earlier this year, a copy of which was obtained by Bloomberg.

Alex Stanton, a spokesman for Bain at Stanton Public Relations & Marketing, declined to comment on the fundraising process.

Sankaty, started in 1998 and run by Chief Investment Officer Jonathan Lavine, is among a number of firms positioning themselves for more distressed opportunities after low defaults and low yields prompted record debt issuance. Oaktree Capital Group LLC, the biggest distressed-debt investor, has gathered $10 billion as it prepares for defaults to accelerate across industries, and firms including Apollo Global Management LLC, Blackstone Group LP and Ares Management LP have collected billions to invest when more energy producers collapse amid low oil prices.

Global corporate defaults have accelerated to the fastest pace since 2009, Standard & Poor’s said last week. The credit rating firm said 79 companies defaulted on their debt in the first nine months of the year, compared with 60 in all of 2014. Metals, mining and steel companies have the highest proportion of distress, followed by oil and gas producers, S&P said.

Sankaty, which manages $25.9 billion, invests across credit markets with leveraged loans, high-yield bonds, distressed debt, collateralized loan obligations and mezzanine securities. The firm has also pounced on sales of nonperforming loans by European banks that are under heightened regulatory pressure. From October to May, Sankaty scooped up 1.36 billion euros ($1.5 billion) in Spanish secured and unsecured loans from BFA-Bankia Group.

Bain Capital oversees $75 billion in private equity, venture capital, credit and hedge fund assets. It was co-founded by former U.S. presidential candidate Mitt Romney, who left the firm in 1999. Bain raised $7.3 billion for its flagship buyout fund last year.