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Fixed-income manager Invesco and affiliated distressed asset investor WL Ross & Co. liquidated its mortgage recovery fund.
The Treasury Department jointly managed the fund in a public-private partnership. The Treasury will receive $221.2 million, in addition to the previously distributed $497.9 million, for a total of $719.1 million for its involvement.
This represents an internal rate of return of 18.3% since the fund’s inception in October 2009.
“The success of this PPIP fund proves that government and private sector professional investors can collaborate successfully,” said Wilbur Ross, chairman of the investment committee of the fund and chairman and CEO of WL Ross & Co. “The PPIP program has resuscitated the private-label mortgage-backed securities market and, at least in our case, resulted in a handsome profit to Treasury. We are proud to have participated in it.”
The Invesco mortgage recovery fund was one of eight active public-private investment funds in the program. Under the program, the fund held its initial closing in September 2009 and ultimately deployed $2.3 billion, including $581 million in equity capital from the Treasury, $581 million in equity capital from private investors and $1.2 billion of debt capital from the Treasury Department.
The federal government funded PPIP with TARP capital. The liquidity this provision provided to PPIP allowed financial institutions to enjoy more elbow room when liquidating legacy assets via the non-agency residential mortgage-backed securities and commercial mortgage-backed securities markets.
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