NEW YORK (Reuters) - Marc Lasry’s Avenue Capital Group LLC is raising an about $500 million venture debt fund, which could take advantage of a recent reckoning of what fast-growing startups such as WeWork are actually worth.
Avenue, the $10.4 billion New York-based distressed investment firm, has commitments of $100 million from one investor and aims to raise the remainder by the end of the year or the first quarter of 2020, Lasry said on Monday at the Reuters Global Investment Outlook 2020 Summit in New York.
He used WeWork as an example of a company that could be a potential target for the new venture fund.
In August, WeWork filed for an initial public offering but abandoned the effort in September as investors balked at high valuations. The deal had originally valued the company at $47 billion.
“What WeWork tells you is just stop going to the extremes,” said Lasry, referring to increasingly high valuations for unprofitable companies. “Do your work ... it’s not that complicated.”
Lasry said that Avenue is also benefiting in its lending from a shift by borrowers to avoid large institutions and governments, and that banks no longer had the edge in such a market.
“There’s a fear of governments and a fear of institutions. There’s been a paradigm shift. Ten years ago, we had to convince people to do business with us,” Lasry said. “Today, people are coming to us. I think people just feel more comfortable dealing with private individuals than government entities.”
Lasry said the trend was seen in Europe, particularly northern Europe, and in Asia in countries including Indonesia, India and Australia.
“It has changed since five years ago, part of the reason is then, everything was growing quite a bit, China was growing, banks were very willing to lend. Today everyone is pulling back, there is more limitation, more disclosure.”
(For other news from the Global Investment 2020 Outlook Summit, click here)
Reporting Megan Davies and Lawrence Delevingne; Editing by Stephen Coates