Diameter raises $4.5 billion for market dislocation credit fund - Bloomberg

Investing.com -- Credit investment firm Diameter Capital Partners has raised $4.5 billion for its third dislocation fund series, exceeding its target, Bloomberg reports.

The fund, managed by the $25 billion firm led by Scott Goodwin and Jonathan Lewinsohn, has already generated a 14.8% return on deployed capital this year, a person familiar with the matter told Bloomberg.

Dislocation funds aim to profit by purchasing undervalued assets from companies whose debt prices have fallen due to market volatility or industry-specific challenges. This latest fund will lock up investor capital for extended periods compared to traditional hedge funds and concentrate on stressed and distressed investments.

Diameter was established as a credit hedge fund in 2017 and launched its first dislocation fund in 2020 during market turbulence caused by the Covid pandemic. The firm’s $25 billion in assets are distributed across its flagship hedge fund, dislocation strategies, and various structured credit vehicles.

The company plans to raise capital for its first captive CLO equity fund in early 2026. These private funds are managed by collateralized loan obligation managers who invest in equity portions of their own CLO offerings.

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