Special Situations

Special Situation Funds

Special situations investing encompasses private equity funds in the areas of distressed debt, restructuring, energy and other real assets, mezzanine finance, direct secondary, and specialty finance. These funds tend to have a slightly different return profile that complement our investments in venture capital and buyout funds.

Restructuring/Distressed Debt Funds
Restructuring funds typically make new equity investments in financially or operationally troubled companies, often for a control position, with a view to improving the balance sheet and operations for a subsequent sale.

Distressed debt funds purchase the debt of companies in distress with a view to participating in any increase in value post reorganization. These funds can be further broken into three strategies: passive trading, active non-control and control. These funds capitalize on opportunities generated by over-leveraged or poorly managed companies.

Energy and other Real Asset funds

Private equity Funds in this area pursue strategies that may be divided three general categories:

Upstream Assets
Areas of investment opportunity for private equity include oil and gas exploration operations, proven oil and gas reserves and commodity mining reserves and operations.
Midstream Assets
Midstream companies focus on pipelines, terminal assets, rail and barge assets, and fuel gathering, processing and storage.
Downstream Assets
Downstream companies focus on the refining and marketing of gasoline and fuels, the transmission and distribution of electricity and natural gas.

Adams Street favors managers that have demonstrated an ability to invest in upstream or midstream companies through commodity cycles and possess operational expertise and industry relationships that create an information and deal flow advantage.

Mezzanine Funds Mezzanine firms have historically pursued strategies that have ranged from more "debt-oriented" to more "equity-oriented" in nature. "Debt-oriented" mezzanine managers typically invest capital alongside equity sponsors who own a controlling stake in a company, and reflect a capital preservation risk orientation focused more on generating fixed income-like return rather than higher risk equity returns. "Equity-oriented" mezzanine managers tend to seek meaningful equity ownership stakes alongside their debt financings to compensate them more fully for higher risk investments. They may also be the only institutional investor in the capital structure.