Back to Hedge Fund 100 Firm Profile Ranking

35. Centerbridge Partners / $14.4 billion

Location:

New York, NY

Founded:

2006

2016 Hedge Fund 100 Rank:

No. 66

2016 Capital:

$10.1 billion

2015 Hedge Fund 100 Rank:

No. 58

2015 Capital:

$11.1 billion

Years on List:

Website:

www.centerbridge.com

Address:

375 Park Avenue
12th Floor
New York, NY 10152

Phone:

212-672-5000

Fax:

212-672-5001

Other Offices:

London

Profile & News

Firm Overview

Centerbridge Partners, founded by Blackstone Group alumnus Mark Gallogly and former Angelo, Gordon & Co. partner and head of distressed securities Jeffrey Aronson, is something of a hybrid. The firm manages multistrategy hedge funds but is best known for its distressed-private-equity business.

Centerbridge raised $3.2 billion in 2006 to launch its flagship Centerbridge Credit Partners fund, a record among private equity firms for a fund’s initial launch. Firm-wide capital has since quadrupled, and today the firm manages $11.1 billion within its hedge funds alone. The firm first appeared on Alpha‘s Hedge Fund 100 ranking only four years after its inception and was named the Private Equity Manager of the Year in the 2007 Nonprofit Awards for Excellence, thanks to a $750 million commitment to failing auto-parts maker Dana Holding Corp. that helped the company stave off bankruptcy.

Centerbridge opened its hedge funds to new capital in 2015 for the first time in several years in preparation for new distressed debt opportunities. The firm will only use the new capital when it’s needed, applying a drawdown structure so that it won’t drag down the fund’s performance.

In October 2013 the New York–based firm announced goals to raise $500 million for Extended Stay Hotels’ IPO alongside Paulson & Co. and Blackstone Group, the hotel company’s other co-owners. The trio’s paper gains at the time of the November 2013 IPO were nearly triple what they had paid. Centerbridge has a long history with Extended Stay: It initially sponsored the reorganization of the then-bankrupt hotel chain in 2010, and Mark Gallogly, co-founder of Centerbridge, was involved in its management while serving as head of private equity at Blackstone in the early 2000s. Extended Stay hurt Centerbridge’s performance in late 2014.

But 2013 was also difficult for the firm. The U.S. Federal Reserve’s quantitative easing policies have allowed troubled firms to access money and restructure, decreasing distressed-investment opportunities for firms like Centerbridge. Consequently, Centerbridge’s flagship fund, managed by Aronson, returned $600 million to investors in the first quarter of 2013, following a $500 million give-back the previous December. Aronson blames a shortage of favorable distressed-investment opportunities for the fund’s underperformance. The firm’s largest holding as of late September was in CIT Group, the financial holding company, which accounted for 27 percent of the firm’s portfolio according to 13F filings. Centerbridge closed its position in auto parts maker Delphi Automotive, formerly its largest holding.

Strategy

The firm focuses on private equity and distressed debt, and specializes in leveraged buyouts, credit investing and distressed-securities opportunities. The Credit Funds invest in distressed assets and the Capital Partners funds make opportunistic private equity and distressed investments.

Funds and Fees Overview

Credit Partners funds include the Domestic Fund, TE Fund, Offshore Fund and Credit Partners Master Fund. The TE Fund and Offshore Fund invest some of their assets in the Master Fund. The Credit Partners Fund was closed to new investors in 2011.

Management Fee	1.75 percent of net asset value per annum paid each fiscal quarter
Incentive Allocation	20 percent of net capital appreciation

Special Credit funds include Special Credit I and Special Credit II. Centerbridge may also receive 20 percent of the profits from the Special Credit funds as carried interest payments.

Management Fee	1.5 percent of aggregate capital commitments per annum 1.25 percent after the launch of a successor fund
Incentive Allocation	20 percent of profits

Capital Partners funds include CCPI and CCPII (and related funds SBS I and SBS II, respectively). The Capital Partners Funds provide no customized services for individual clients. CCPIII is expected to begin investing in the second quarter of 2015.

CCP I

Management
Fee

1.5 percent per annum

1.25 percent per annum if capital exceeds $2 billion

Paid quarterly
in advance

CCP II and CCP III

Management
Fee

1.5 percent per annum

Paid quarterly
in advance

Performance
Fee

20 percent of profits

Clients

Centerbridge manages the funds listed above.

Regulatory Assets Under Management (RAUM)*
Discretionary	$23.97 billion (19 accounts)
Nondiscretionary	$0 (0 accounts)
Total	$23.97 billion (19 accounts)

Employees	178
Clients	11–25 total	16 percent non-U.S.
Fiscal Year Ends	December
All data as of December 31, 2014. *Regulatory Assets Under Management (RAUM) includes no deduction of offsetting liabilities, thus representing gross AUM, not net AUM. RAUM calculations include leverage, proprietary assets and uncalled capital commitments, among other items not required in the calculation of AUM.

Owners and Executives

Name	Position	Position Held Since
Jeffrey Aronson	Co-Founder, Managing Principal	09/2005
Mark Gallogly	Co-Founder, Managing Principal	09/2005
Jeffrey Gelfand	CFO	02/2006
Jed Hart	Limited Partner	03/2008
Suzanne Clark	Chief Legal Officer, General Counsel	12/2009
Elizabeth Uhl	CCO	10/2011