Bloomberg — Root Capital, a Brazilian asset manager that specializes in credit, plans to raise about $400 million for a fund to invest in distressed corporate assets in the South American nation.
The fund will be geared toward foreign investors and target assets like legal claims, according to Rafael Fritsch, chief investment officer at the Rio de Janeiro-based firm, adding that the money should be raised over the next six months.
“There’s a pipeline of good opportunities at attractive prices,” Fritsch said in an interview. “Interest rates are expected to fall, but not too fast — so we still expect that Brazil’s credit markets will face a bumpy road in the second half of the year.”
The pile of Brazilian distressed assets has been on the rise as policymakers led by Roberto Campos Neto embarked on an aggressive tightening to tame inflation, while the Americanas SA blowout earlier this year added to investor worries.
Fritsch and other partners left Canvas Capital SA — a hedge fund in which Credit Suisse Group AG owns a stake — last year and reactivated Root Capital. The firm, which he founded in 2009, later entered into a joint-venture with Andre Jakurski’s JGP Gestao de Recursos, and the combined entity has been managing funds since. Last year, Root began raising capital for new credit funds again.
Root has about 2.3 billion reais ($474 million) under management and a team with 15 people, said Fritsch, who also had stints at Arrowgrass Capital Partners LLP and Deutsche Bank AG.
Its public funds Root Capital High Yield and Root Capital Crédito High Grade Plus are up 7% and 6.8% after fees, respectively, since the beginning of the year, compared to a 6.7% gain for the benchmark CDI rate.
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