Pimco Raises $5.5 Billion to Buy Bank Assets
Bond Firm Has Closed Fund to New Investors and Will Target Banks' Unwanted Assets
Bond giant Pimco has raised $5.5 billion to buy bank assets in the U.S. and Europe and has closed the fund to new investors, according to a person familiar with the fundraising.
The Bank Recapitalization and Value Opportunities II fund, or Bravo II, is being led by deputy chief investment officer Dan Ivascyn and will target a range of unwanted assets on the balance sheets of banks, including residential and commercial real-estate assets.
Investors are lining up to snap up the unwanted loan portfolios and real-estate assets. Many of the targets lie in Europe, where banks have been busy shrinking their balance sheets primarily to meet stricter capital requirements.
Last month, The Wall Street Journal reported that two of Italy's biggest banks, Intesa Sanpaolo ISP.MI +2.69% SpA and UniCredit UCG.MI +4.71% SpA, were in talks with U.S. private-equity firm KKR KKR +1.65% regarding the sale of some of their restructured loans.
Commerzbank CBK.XE +4.46% said in February that it had sold €710 million of Spanish commercial real-estate loans to investors. In the U.K. late last year, the Royal Bank of Scotland RBS.LN +2.46% sold its first portfolio of U.K. commercial property assets to hedge fund Varde Partners, and in August, Spain's 'bad bank'—set up to house assets from the country's bailed out banks—sold its first real-estate assets to private equity group HIG.
California-based Pimco, traditionally a bond-house and home to the world's largest mutual fund, has been busy diversifying in recent years. Bravo II follows the $2.4 billion raised for Bravo I in 2011.
Pimco's new Chief Executive Douglas Hodge told Financial News last month that he wants to broaden the firm's equity expertise, including backing the hiring of teams by equity chief Virginie Maisonneuve. The firm offers products in derivatives, multi-asset, real estate, private equity, real return and emerging markets, but is still 90% exposed to fixed income.
Mr. Ivascyn, previously a credit and mortgages specialist, was promoted to the deputy CIO role in mid-January following the unexpected departure of chief executive Mohamed El-Erian, whose exit left Bill Gross, who founded Pimco in 1971, as sole chief investment officer.
Andrew Balls, head of European portfolio management; Mark Kiesel, head of Pimco's corporate bonds group; Scott Mather, head of global portfolio management; Mihir Worah, a former particle-physicist who heads up Pimco's real-return portfolio management team; and Ms. Maisonneuve, were also promoted to the deputy CIO role.