| Frank Brosens, Taconic Capital Advisors (Bloomberg) |
New York–based multistrategy hedge fund firm Taconic Capital Advisors is raising money for a new hedge fund, a longer lock-up vehicle that will invest in illiquid situations in Europe. The new fund, called the Taconic European Credit Dislocation Fund, is intended “to fully capitalize on the less liquid opportunities we have identified in Europe, particularly in Spain, where we have a sourcing edge,” the firm tells clients in its second quarter letter, which was obtained by Alpha.
Taconic elaborates in the letter that it is now finding attractive opportunities in direct lending and distressed debt in the real estate and renewable energy sectors. It stresses that some of these investments may also be made by the Taconic Opportunity Fund, but the size of the investments in that fund would be “limited” due to their less liquid nature.
Taconic was founded by Frank Brosens and Kenneth Brody, both alumni of Goldman Sachs & Co. Brosens was a partner who once served as head of risk arbitrage, while Brody was a general partner and member of the management committee. Brody also previously served as president of the Export-Import Bank of the United States during the 1990s. Brody retired from Taconic on January 1.
As of July 1, 2014, Taconic was managing $9.1 billion, including $8 billion in the Taconic Opportunity funds and $960 million in its event-driven funds. It has an additional $144 million in the Taconic Sidecar Fund I.
The Taconic Opportunity Fund gained 3.28 percent in the second quarter and 3.81 percent for the first six months. The Taconic Opportunity Offshore Fund rose 3.24 percent in the second quarter and 3.77 percent in the first half.
Second quarter gains were driven by its credit and equity portfolios, and to a lesser extent, capital structure arbitrage/hedged credit, according to the letter. It lost money from portfolio hedges and macro.
“The losses in portfolio hedges came mainly from short positions in various emerging market sovereign credits, as well as futures and options on equity market indices,” the firm adds in the report.
Its credit portfolio achieved gains from positions “in complex distressed and liquidation situations,” the firm states in its second quarter report. “Gains in our equity portfolio were widespread and included positions that were detractors in the first quarter.”
The Taconic Opportunity Fund returned 15.40 percent in 2013 and 12.95 percent in 2012. The much smaller event-driven funds — Taconic Capital Partners 1.5 and Taconic Offshore Fund 1.5 — added 2.85 percent and 2.83 percent, respectively, in the second quarter. Both funds gained 5.43 percent for the first half.
“Gains in the second quarter came primarily from credit and, to a lesser extent, capital structure arbitrage/hedged credit, while a modest loss was generated in equities,” the firm states. “Portfolio hedges and macro were essentially flat.”
The Taconic Capital Partners 1.5 fund returned 10.13 percent last year and 9.78 percent in 2012.
