CarVal Investors LLC, the credit investment unit of commodities trader Cargill Inc., plans to raise $2 billion to buy distressed investments as banks need to sell assets to meet regulatory requirements.
CVI Credit Value Fund III LP expects to start formally gathering capital in the second quarter, according to a person briefed on the plan. The fund will buy corporate bonds, loan portfolios and structured products mostly in Western Europe and the U.S., said the person, who asked not to be identified because the fundraising is private.
The Minneapolis-based firm, led by Chief Investment Officer John Brice, is seeking additional firepower less than a year after raising $2.3 billion for CVI Credit Value Fund II LP, which uses the same strategy. That vehicle is producing a return of 29 percent on invested capital since inception, the person said.
Ann Folkman, a spokeswoman for CarVal, declined to comment.
CarVal joins investment firms including Apollo Global Management LLC (APO:US), Cerberus Capital Management LP and Pacific Investment Management Co. looking to take advantage of distressed sales by financial institutions, especially in Europe. Lenders will offload 300 billion euros ($412 billion) of distressed loans through 2018, more than double the about 125 billion euros they have sold since 2010, according to PricewaterhouseCoopers LLP.
Cargill founded CarVal Investors in 1987 as an extension of its proprietary and financial trading business. In 2006, CarVal became an independent subsidiary of Cargill. It now manages about $10 billion, according to the firm’s website.
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