Marathon holds $400m first close of public-private toxic asset fund

Known as the Public Private Investment Partnership, the initiative was announced in March 2009 by the Treasury Department and the Federal Reserve as a means of mopping up some of the devalued real estate loans and mortgage-backed securities which have been weighing down banks' balance sheets. So far, a reported $5.07bn has been raised.

In July, the nine firms were selected from the scheme, giving them 12 weeks to raise $500m of capital each from private investors, which would then be matched by the Treasury Department and augmented with debt financing. Among the chosen asset managers were private equity firms TCW Group, Oaktree Capital Management and Marathon. Over 100 firms applied.

According to reports, Marathon fell short of the target, raising $400m instead of the targeted $500m, but a Treasury official quoted in Reuters said that the firm would receive government money regardless.

So far, eight of the nine chosen managers have raised $5.07bn in total from investors, which will be matched by the government and then doubled with debt capital from the Treasury, to provide a total purchasing pool of $20.26bn. Oaktree is the only firm to have not held a first close.

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