HSI, a São Paulo-based real estate fund manager, is in the market with a new debt fund, which will focus on a variety of credit opportunities, including in real estate, PERE has learned.
HSI declined to comment, but PERE understands that the firm is aiming to raise $400 million for HSI Special Opportunities II, which will target different types of transactions up and down the capital stack, including senior debt, mezzanine debt and preferred equity, according to a source familiar with the matter. A first close is anticipated in the third quarter.
The target will be more than double the amount that HSI raised for the first fund in the debt series, HSI Special Opportunities I, which gathered $120 million alongside approximately $100 million in a sidecar vehicle. That fund is understood to be generating returns in the local currency in the mid-20s percent.
The investor base for HSI Special Opportunities Fund II is expected to be similar to that of its predecessor – a mix of endowments, foundations, family offices and sovereign wealth funds. About half of the limited partners are expected to be from the US, with the remainder from Europe and Asia.
HSI is targeting returns of over 20 percent in Brazilian real for the vehicle. Through the fund, the firm will originate debt where the Brazilian banks are not lending, including on assets that are not cash-flowing.
HSI’s previous debt transactions include financing a hamburger and steakhouse dining chain with a capital structure problem, a deal the firm recently exited. HSI also financed a Brasilia-based electrical distribution company that was facing liquidity issues and needed additional capital in the face of a distressed credit market.