Taconic Capital, the event-driven multistrategy investment firm, is fundraising for its European Credit Dislocation Fund IV, the fourth iteration of the opportunistic fund series, according to someone familiar with the details. ECDF IV will focus on smaller, illiquid, bespoke, off-the-run opportunities where there is less competition and where the firm believes its sourcing strength throughout Europe gives it an edge.
According to investors, Taconic says the new fund seeks to take advantage of less-developed and less-efficient markets in Europe, especially in Spain and Italy. It also expects to see attractive opportunities in Germany, the U.K., and the Nordic countries. And Taconic believes economic weakness and higher interest rates in Europe will boost the opportunities in the areas the fund is targeting, investors note.
ECDF IV plans to concentrate on opportunistic lending and distressed debt and may invest in other strategies in the $10 million-to-$50 million range. According to investors, the firm says the new fund has an expected gross internal rate of return in the mid- to high teens.
Taconic launched the Taconic European Credit Dislocation II Fund in October 2017 in an attempt to capitalize on investment opportunities primarily in Europe, per a regulatory filing.
Institutional Investor previously reported that in March 2021 Taconic closed ECDF III with total commitments of $828 million. At the time, it was hoping to take advantage of less-liquid credit investments in Europe, focusing on opportunities that had arisen because of the pandemic-driven economic downturn.
According to investors, 89 percent of total invested capital across the ECDF funds has been in proprietary deals or deals with limited competition and active engagement. In addition, 95 percent of total invested capital has gone to situations in which Taconic was in the driver’s seat.
ECDF IV is first new fund for Taconic since April 2024, when it launched the Taconic Merger Arbitrage Fund.
Portfolio managers Keith Magliana and Jaime Lamo de Espinosa head up the team and have worked on all of the ECDF funds. Taconic was founded by Goldman Sachs alums Frank Brosens and Kenneth Brody in 1999. Brody retired in 2013 and died in March 2023.
Taconic currently manages about $7 billion. Its strategies include opportunistic credit, merger arbitrage, and catalyst-driven equities, as well as a co-investment platform, according to its website. It is best known for its hedge fund, the Taconic Opportunity Offshore Fund, which climbed about 8 percent in 2024.
