U.S. private equity firm Blum Capital Partners is seeking to raise capital for a fund that would invest in distressed debt backed by real estate primarily in Europe, its chairman Richard Blum said.
Attending a business meeting linked to the Summit of the Americas in Colombia, Blum said the investment fund may be up and running in as little as three months and seek opportunities in Europe among other regions.
"We have never been investors in Europe, and I think there's going to be a lot of distressed debt that the banks have to sell. We are thinking about real estate," Blum told Reuters on Friday in the historic coastal city of Cartagena.
Distressed debt investing often involves debt securities in companies that have either filed for bankruptcy or appear likely to do so in the near future. Investors pounce on such securities with the bet that these firms will be rehabilitated and eventually profitable again while their debt will rise in value.
Blum, who founded the company in 1975 and counts the Dalai Lama and former U.S. President Jimmy Carter as friends, said he would like to raise a fund that meets historic levels of about $1 billion but acknowledged that may be difficult.
The fund has not been marketed yet.
"I'd like to think that in time we'd be able to raise funds that are the same size as we did before, but the environment is much more difficult," said Blum, who is married to U.S. Democratic Senator Dianne Feinstein.
"These days, it's hard because a lot of institutions have lost a lot of money."
The global financial crisis in 2008 and the more recent crisis in Europe have produced a lot of distressed debt opportunities. Blum is already buying distressed debt through the Pacific Alliance Group in Hong Kong, he said.
The new fund could tap one of the "top four" investment banks to work with along with the consultation of CBRE Group Inc., the world's largest commercial real estate services firm. Blum Capital owns about 10 percent of CBRE.
The fund could acquire real estate as individual properties or by way of a real estate investment trust, said Blum.
