(Bloomberg) -- Alternative asset manager Balbec Capital Management has secured over $1.5 billion in commitments for its fifth and largest flagship fund, which it will deploy to buy up residential, commercial and consumer whole loan portfolios across the performance spectrum.

Launched last year, the InSolve Global Credit Fund V also comes with a $100 million expandable co-investment vehicle. It is geared toward credit investments that have little correlation to the global public markets, including both performing and non-performing debt. The fund also focuses on alternative assets like residential mortgage servicing rights, according to a statement seen by Bloomberg.

The fundraise comes amid a looming recession as the Federal Reserve struggles to tame inflation. Delinquencies are ticking up to pre-pandemic levels and may continue to increase if the macro environment remains unchanged. 

“With higher defaults, our investment opportunities are likely to increase in size and frequency,” said Peter Troisi, Balbec partner and head of investments for the Americas, in a phone interview. “The good news is that our opportunity set exists in good and bad times.”

Balbec started raising money for the fund last year, securing more than $560 million in its initial effort. It has since deployed more than 80% of commitments, mainly by scooping up mortgage servicing rights and sub-performing and non-performing residential mortgage loans.

The firm expects to recycle some of these proceeds by monetizing assets that have appreciated in value this year, according to Troisi. “We are net sellers of MSRs in this environment,” he said, adding that the assets have become more attractive as refinancing volume has dropped. 

The firm is also eyeing sub-performing residential mortgage loans as well as commercial mortgage loans, mainly in the hospitality and multi-family sector, he said. 

“Since launching the Fund, we have deployed a significant amount of its capital into opportunities that we believe have attractive risk-reward profiles with upside potential, and strong downside protection,” said Charles Rusbasan, Balbec’s founding partner and CEO, in the statement. 

The company closed its fourth investment vehicle in 2020, targeting non-performing consumer loans. It quickly deployed the funds to take advantage of the pandemic’s disruption in the consumer debt sector.

Rusbasan founded Balbec in 2010, having previously launched Bear Stearns’ Max Recovery unit devoted to Chapter 13 bankruptcy debt. The firm counts former Bear Co-Chief Operating Officer Warren Spector as its chairman. Since its inception, it has deployed more than $14 billion across 22 countries, focusing on consumer insolvency investments. 

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