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UK Duke Street closes second CDO fund

The debt fund management division of UK private equity firm Duke Street Capital has held a final close of Duchess II, the firm's second collateralised Debt Obligation (CDO) fund. The fund has raised E550m, less than the E1bn raised by its predecessor, Duchess I.

‘Institutional demand has been difficult to pin down,' said David Wilmot, a director at Duke Street Capital Debt Management, ‘It was more difficult to sell the rated notes this time but we met with very good support from equity investors.'

The fund, which invests in both sterling and euro dominated senior secured debt and mezzanine, predominantly used in Western European leveraged buy-outs, is already 80 per cent invested. It is expected to be fully invested within three months.

‘We benefited from a strong supply of assets in the first quarter,' Wilmot commented, ‘The second quarter might be a bit quieter, but availability of collateral should still be adequate for what we need.'

Duchess I originally closed at E750m in June 2001 and was increased to E1bn in February 2002 through a tap issue. Duchess II is the largest CDO to close in Europe this year.

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