Firm News

Former Whitebox PM Launches New Fund

By September 29, 2020March 22nd, 2021No Comments

Invictus Global will focus on middle-market distressed investing.

Amit Patel, the former Whitebox Advisors portfolio manager who led its Puerto Rico distressed debt bet, has just closed an initial capital raise of more than $50 million for Invictus Special Situations Master I, the first hedge fund offered by Invictus Global Management.

When Patel left Whitebox to start the new hedge fund firm in early 2019, he thought the distressed cycle would soon turn, given that bankruptcies were already on the rise. But the pandemic has kicked it into higher gear, he told investors.

“We believe the Covid-19 pandemic has become the catalyst for a multi-year cycle of bankruptcies and restructurings across a variety of sectors, ranging from retail to healthcare,” Patel, Invictus managing partner, wrote in a September 28 letter to investors that Institutional Investor obtained.

“Despite unprecedented government assistance in terms of direct stimulus and ultra-accommodative monetary policy, the number of defaults has risen sharply in recent months as highly levered businesses found themselves unable to absorb multiple months of reduced cash flows,” he added.

Distressed investing took a hit in the first quarter when the pandemic roiled markets but has since come back. The Hedge Fund Research distressed/restructuring index fell 11.7 percent in the first quarter but has been positive every month since April and rose 9.7 percent in the second quarter.

Invictus plans to focus on the middle market. “We believe that the middle market will remain far less crowded and enable us to gain exposure to investments atop the capital structure that are backed by strong collateral or protected streams of cash flow,” wrote Patel. “Presently, we are evaluating a number of unique opportunities that include a debtor-in-possession loan to a prominent food industry brand with strong intellectual property assets as well as the capital structure of a healthcare company embroiled in multi-state litigation”.

Patel, who is the portfolio manager responsible for leading the Invictus investment process, most recently was a portfolio manager on the credit investment team at Whitebox Advisors, where he worked from 2013 to 2019.

At Whitebox, Patel was the architect of the firm’s successful bet on distressed Puerto Rico debt. He worked on that with trade with Cindy Chen Delano, an attorney he had hired in 2016 as Whitebox’s senior legal analyst. Together, they helped form the Cofina creditors group, which lobbied in favor of the U.S. bankruptcy legislation for Puerto Rico called Promesa, which established a financial oversight board and a process for restructuring debt, among other matters.

Delano joined Patel at Invictus, where she heads legal and litigation strategies and is responsible for the firm’s legal analysis and involvement in contested restructurings and litigation-related activities.

The financing round was led by Gatewood Capital Partners, a private equity firm focused on seeding small to medium-sized private equity, real estate, and other alternative asset managers, and Corbin Capital Partners, a $7.39 billion hedge fund firm.

“In our opinion, Invictus has a unique combination of skills – experience investing in distressed, often complex, situations and the ability to source opportunities from segments of the market, both public and private, that are often misunderstood or overlooked. We’re excited to partner with them given that the current distressed market should align well with their strategy,” John Cocke, partner and co-portfolio manager of credit strategies at Corbin, told II in an emailed statement.

Some $10 million in additional commitments came from other investors, and Invictus is still raising money for the fund. Patel said he hopes to amass between $150 million and $200 million.


Original source: Institutional Investor