Prices for special sits and turnaround increase

Average high bids for special situations and timber funds increased by 11.03% and 32.44% respectively over the period.

Pricing for special situations, turnaround and distressed credit funds spiked in the three months to the end of July while real estate dropped off, according to data from intermediary Setter Capital.

The average high bid for a special situations fund over the 90 days to 31 July was 80.77 percent of net asset value, up 11 percent on the 72.75 percent registered over the previous period.

The average high bid for turnaround funds increased by 4 percent to 97.7 percent of NAV, with distressed credit rising by 2.4 percent to hit 92.3 percent.

“We are seeing the spike in interest, as well as in prices, for distressed credit and special situations,” said Peter McGrath, Setter’s managing director. “With all the talk about over-valuation in public markets, people might want to take a different approach or maybe hedge a bit.”

The interest in pricing

The biggest price increase was seen in timberland funds, whose highest average high bid was 78.8 percent of NAV, compared with 59.5 percent in the previous 90-day period, an increase of 32 percent. Setter associate Zia Rahman points out that sampling error, due to there being only seven funds in the data set, is a likely factor.

Notable fallers include cleantech and real estate, which dropped by almost 17 percent and 10 percent respectively between the last 90-day period and this one.

“Overall average real estate pricing was down, and this could be a function of the specific funds that were priced during the period,” McGrath says. “There have been concerns with valuations in some markets, like India, which has led to the emerging markets funds affecting the average strategy price.”

Setter Capital’s price report is based on actual bids or indications given by 1,300 buyers.