GSC Group, “a leading institutional investment manager of alternative assets,” is pitching a new fund that will invest in distressed subprime residential mortgage-backed securities, according to a spokesman with the investment firm.
“We are getting ready to launch the distressed fund which will be run by our real estate group,” said company spokesman Carl Crocetto.
The so-called “Pendulum Fund” will invest in distressed classes of cash and synthetic asset-backed securities and will be headed by Ed Steffelin, who currently runs the firm’s hedge fund, “Eliot Bridge”.
GSC Group had $24.1 billion in assets under management as of June 30, 2007, and is the latest of several firms to seek out undervalued securities.
Recent liquidity concerns have forced a slew of banks and lenders to dump subprime-related assets at a deep discount, creating buying opportunities for hedge funds and private equity firms.
Goldman Sachs has raised $4.5 billion to take advantage of distressed prices, including a $1.8 billion fund known as “Liquidity Partners III”, which is expected to invest in leveraged loans and other debt arising from the credit crunch.
They are designed “to take advantage of distressed opportunities in the credit markets,” Chief Executive Lloyd Blankfein said at the Merrill Lynch Banking & Financial Services Conference.
On Tuesday, BlackRock Inc. CEO Laurence Fink said his firm was also launching similar distressed securities funds.