Duet gathers €100m for first closing of Euro debt vehicle

Duet and partner Forum seeded fund but institutions also contributed

Duet Group has raised the first €100m for a European debt fund that it hopes to expand to €400m-€500m. Duet will seed the fund itself at its first closing with strategic partner Forum European Realty Income III, but said a handful of UK and European institutions have also committed capital.

Hedge fund Duet made three appointments to develop its debt business via its Duet Private Equity subsidiary. The team is led by Dale Lattanzio and includes Cyrus Korat; both joined in September 2008 from Merrill Lynch, where Korat was a bond trader.

Rob Clayton, who was Topland’s chief financial officer  before joining Duet earlier this year, is the third team member. They have been talking to investors for a year, but the closing now could be a sign that investors are starting to warm to the idea of debt investment.

Palatium Investment Management, the debt advisory business run by Paul Rivlin and Neil Lawson-May, has also raised £100m in the past month. “We have a segregated account with a family office and are in the market for appropriately-priced mezzanine,” Rivlin said.

Lattanzio said Duet would look at existing debt, including CMBS and non-performing loans, and make new loans, particularly mezzanine or top-up financing in restructuring deals with possible 15%-20% returns.

“Debt investment strategies have proved profitable in previous cycles and there aren’t many teams or much capital to fill the void,” he said. The team will focus on the UK and Germany. “The market has been dominated by overseas and other buyers who haven’t required a lot of debt,” said Lattanzio. “But anybody seeking  an opportunistic return will find it hard to put in 40% equity.”