Special Situations Investing

Special Situations is defined by (i) a community of participants (ii) Yield+ (iii) mindset. These situations draw investors to buy into a security (e.g. debt, equity or derivative) based on the special situation, rather than the underlying fundamentals of the security or some other investment rationale. This type of investment is an attempt to profit from a potential rise or fall in value that the special situation presents which may be driven by a restructuring, refinancing or other investment activity. It is those situations and investors (principally private equity, hedge and debt funds but increasingly other alternative capital providers) who we are deeply connected to through our special situations team.

Special Situations can result in a restructuring, refinancing or M&A therefore we draw on restructuring, finance, tax and corporate skill sets in particular across a number of different sectors, countries and asset class specialisms in a seamless fashion.

special situation in finance is an atypical event which has the high potential to alter the future course of a business, materially impacting the company’s value. The connotation of the event may be both positive (for example, merger or acquisition) and negative (conflict, distress, etc.) The notion also covers corporate restructuring and corporate transactions, such as spin-offs, share repurchases, security issuance/repurchase, asset sales, or other catalyst-oriented situations. Further, a shareholders conflict is also considered a special situation.

In his well-known book Security AnalysisBenjamin Graham divides special situations into six classes:

  • Class A: Standard arbitrages, based on a reorganization, recapitalizationor merger plan.
  • Class B: Cash payout, in recapitalization or mergers.
  • Class C: Cash payments on sale or liquidation.
  • Class D: Litigated matters.
  • Class E: Public utility breakups.
  • Class F: Distressed assets.
  • Class G: Miscellaneous special situations.

In general terms, Special Situations Investing usually refers to assets (companies, projects, any other asset) in distress. In realty this type of investing encompasses a much bigger quantity of different situations.

We are active in all Classes. We are not focused on a specific asset class or a specific business sector but really the opportunity itself, the “situation”.

If you believe you have an investment opportunity for us, please don’t hesitate to contact us.

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