The U.S. Treasury Department announced yesterday that two of the fund managers selected to participate in Treasury’s Legacy Securities program had raised the requisite $500 million of private capital in order to obtain the matching debt and equity funds from Treasury to fund their respective Public-Private Investment Funds (PPIFs). These initial “closings” of PPIFs are for funds managed by Invesco Ltd. (Invesco Legacy Securities Master Fund, L.P.) and The TCW Group, Inc. (UST/TCW Senior Mortgage Securities Fund, L.P.), which Treasury states have each partnered with small, minority- and/or women-owned investment fund businesses. The fund managers, along with seven others, were selected in July to participate in Treasury’s Legacy Securities program. Treasury expects that the remaining seven initial closings for the other PPIFs will occur throughout October. Following an initial closing, each PPIF will have the opportunity for two more closings over the following six months to receive matching Treasury equity and debt financing.
Treasury’s established its Legacy Securities program earlier this year to encourage investment in mortgage-backed securities issued prior to January 1, 2009 that held a “AAA” rating at the time of issuance. Treasury’s expressed hope is that the PPIFs that have been established and funded in part with Treasury capital will bring public and private funds together to help unblock the financial chokehold on the secured lending (and primarily mortgage-lending) markets.