Toscafund Asset Management is raising money for two new funds.
The London-based firm headed by Tiger Cub Martin Hughes recently launched Tosca Strategic Fund. According to a regulatory filing, it has raised $47 million so far.
The firm hopes to raise as much as $200 million.
The new fund will be similar to Tosca fund, a long-short fund with an emphasis on financial services stocks but with a focus on Europe only, according to someone familiar with the fund. It will be headed by John de la Hey, who manages Tosca.
Tosca fund is having a good year so far. It is now up 12 percent after gaining nearly 1 percent in May.
The firm is also launching Toscafund U.K. Debt Fund to provide secured debt capital to small to midsize companies in the UK. It is targeting what the firm deems to be good secure risk-adjusted returns of 12 percent per year and an annual 5 percent income yield.
The debt fund will be headed by Gary Davison, a former capital and debt advisory partner for Ernst & Young in the UK who has 27 years of credit experience.
Toscafund expects strong interest from U.S. endowments and charities, figuring they will perceive the fund as offering relatively safe returns and cash flow.
The new fund is expected to be boosted by strong economic growth prospects in the UK in the wake of the recent elections.
Initial capital is limited to $300 million.
Altogether, Toscafund currently has about $3.7 billion under management and figures to have about $4 billion after it raises money for the new debt fund.
Hughes, who once served as chairman of Tiger Management Europe, founded Tosca in 2000. De la Hey has been with Toscafund since its inception. He worked at Tiger from 1997 to 2000.
Hughes currently manages Tosca Opportunity, which is up 16 percent year to date. The fund rose 1 percent last year as Hughes played defense, protecting his 56 percent gains from 2013.
This year’s gains are driven by two longtime winning positions — Regus, a global company that rents office space, and Redrow, the UK homebuilder.
In June 2014, Hughes closed Tosca Opportunity and its sister fund, Tosca Mid Cap, to additional inflows.
Hughes deploys a private equity–style investment horizon and targets returns in public companies. He told clients at the time that he figured that his core holdings, many of which he has held for at least four years, will take up to an additional two years to reach their fair valuations and/or exits. So, he anticipated the funds will remain closed to inflows for at least two years.
