KLIM Goes on ‘Truffle Hunt’ With New $1 Billion Credit Fund
KLIM Goes on ‘Truffle Hunt’ With New $1 Billion Credit Fund
(Bloomberg) -- Credit investment firm Kennedy Lewis Investment Management will extend its foray into middle-market companies that face disruption early next year with a new $1 billion fund.
The fund will focus on lending money to companies in sectors undergoing some form of disruption, building on the success of a smaller portfolio launched last year, according to people with knowledge of the matter. KLIM “truffle hunts” for proprietary and structurally complex investments that fall outside the parameters of larger funds, according to an investor document seen by Bloomberg.
Investors have already reserved or expressed interest in more than $500 million of the new fund’s capacity, said the people, who weren’t authorized to speak publicly. The group includes investors in the first fund, along with U.S. state and European pension plans, insurance companies and multi-family offices, the people said.
A representative for New York-based KLIM declined to comment.
The fund will have a six-year investment period and KLIM plans to start investing around April, the people said. Investors who commit early will pay lower incentive fees, which the firm won’t receive unless the fund returns at least 7%, the people said.
KLIM’s earlier fund posted gains of 15% in its first year and is ahead about 17% for 2019 as of August. That fund made money through investments in Texas gas plants exiting bankruptcy and the purchase of a portfolio of semiconductor patents, people with knowledge of the matter said last year.
KLIM was founded in 2017 by David Chene, who previously led U.S. distressed debt at Cargill Inc.’s CarVal Investors, and Darren Richman, a former top executive at Blackstone’s GSO Capital Partners. The firm hired John Brice, who built the $10 billion investing arm of Cargill, in June 2018.
Earlier this year, KLIM took control of fitness studio operator Flywheel Sports after lending to the company in 2018 so it could refinance existing debt and provide working capital to build its in-home business, people familiar with the matter said at the time.
--With assistance from Sridhar Natarajan.
To contact the reporter on this story: Josh Saul in New York at jsaul15@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Christopher DeReza
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