Bloomberg News

Zell Said to Seek $1 Billion for New Private-Equity Fund

July 03, 2012

Zell Said to Seek $1 Billion for New Private-Equity Fund

Sam Zell in Chicago. Photographer: Jose More/Chicago Tribune/MCT via Getty Images

Billionaire Sam Zell’s Equity Group Investments LLC is seeking $1 billion for its next distressed private-equity fund, said two people familiar with the matter.

Zell Opportunities Fund II LP will make distressed investments including asset acquisitions, secondary-market purchases and rescue capital for cash-strapped companies, according to the people, who asked not to be identified because the information isn’t public.

Terry Holt, a spokeswoman at Zell’s Chicago-based firm, declined to comment.

Equity Group Investments is among a number of firms raising money to take advantage of buying opportunities as economies struggle. Oaktree Capital Group LLC, the world’s largest distressed-debt investor, is seeking as much as $6 billion for its latest distressed-debt fund. Avenue Capital Group LLC, co- founded by Marc Lasry, has raised more than $2 billion for its second European distressed-debt fund.

Zell’s firm, which is committing $100 million to the new pool, gathered its previous distressed private-equity fund in 2009 to take advantage of the credit crunch in the aftermath of the Lehman Brothers Holdings Inc. collapse.

The first fund, which has invested $666 million, was generating 1.2 times capital and a 16 percent net internal rate of return as of March 31, the people said. About 76 percent of the fund was in corporate debt and the rest in real estate, according to one of the people.

Fund I owns a stake in Texas utility Energy Future Holdings Corp., the people said. The company, formerly known as TXU Corp., was taken private by KKR & Co. and TPG Capital for $43.2 billion in 2007, the biggest leveraged buyout in history. Energy Future has reported five consecutive quarterly losses.

Other investments include Blockbuster LLC, Domino’s Pizza Inc., Hilton Hotels Holdings Corp. and Marriott International Inc.

To contact the reporter on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net

To contact the editor responsible for this story: Christian Baumgaertel at cbaumgaertel@bloomberg.net


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