A recent article in the “New York Times” made a a big play about Avenue Capital’s strategic allocation of capital to Europe, which meets the opportunistic and value-driven approach of founder Marc Lasry. The $3bn of capital is expected to be committed for 3 to 5 years, but is being drip-fed in at roughly $150m a month .
According to the NYT, “In Britain, Avenue’s bets include the debt of Punch Taverns as well as Travelodge, a hotel operator burdened by heavy borrowing from an unsuccessful 2006 $1.2 billion buyout by Dubai’s sovereign wealth fund.
” “Travelodge is a good business but they’re having trouble in the current economic environment,” Mr. Lasry said. Another sizable investment is in Preem, the largest oil refiner in Sweden.
“In Preem’s case, Avenue bought bonds from holders based in the United States, while Punch’s debt was purchased from British insurance companies. Travelodge’s debt was acquired from banks in Britain, Italy and Ireland.
In all three cases, Avenue’s traders benefited because investors were itching to get out of anything European, even though Sweden and Britain aren’t being directly buffeted by the problems in the euro zone and have their own currencies.”