Gramercy raises $1 billion for distressed emerging markets fund

By Susanna Moon

Chicago, Nov. 18 – Gramercy Funds Management LLC closed its third distressed and opportunistic emerging markets credit strategy, Gramercy Distressed Opportunity Fund III, on Oct. 1 with almost $1 billion of commitments.

The strategy begins with three times what the firm raised for Gramercy Distressed Opportunity Fund II, with $305 million of commitments closed in 2013, according to a company announcement.

The fund has a five-year investment horizon and “will invest opportunistically in dislocated and defaulted sovereign, quasi-sovereign and corporate credits,” the release noted.

GDOF III will also target stressed credit opportunities that “require flexible capital solutions such as direct loans.”

Gramercy also will actively short bonds and hedge long positions, both of which are relatively unique in the distressed debt space.

“Gramercy’s strength lies in our deep expertise in leading financial restructurings in emerging markets and our successful track record of negotiating fair, profitable outcomes for investors in those regions,” Robert Koenigsberger, chief investment officer and founding partner, said in the company press release.

“We have utilized our abilities to drive strong returns historically, in a manner that has proven to be uncorrelated and tail risk aware, and look forward to successfully executing on our most recent distressed opportunity strategy.”

Added David Herzberg, PM and head of credit research: “Regarding tradable credit opportunities, we aren't dependent on systemic distress in emerging markets to put capital to work. EM debt issuance has increased dramatically since the financial crisis so even if one assumes little change in default rates, there remains a tremendous number of opportunities to consider.”

“To date, we have called 50% of the capital and have made 15 investments across multiple subsectors in Latin America and CEEMEA.”

Gramercy is an emerging markets investment manager based in Greenwich, Conn.

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