MatlinPatterson Co-Founder Mark Patterson Stepping Down

By Hillary Canada 

Mark Patterson, co-founder of distressed investor MatlinPatterson Global Advisers, is stepping down from day-to-day operations of the business he co-founded nearly two decades ago, according to a letter to employees viewed by Dow Jones.

Mr. Patterson will retire from his position as chairman and chief executive of MatlinPatterson's asset-management division at the end of the year. He will continue to serve as nonexecutive chairman of the division, and plans to spend more time focused on his role on the board of Jazz at Lincoln Center in New York.

Co-founder and Chief Executive David Matlin and Managing Partner Peter Schoels will take the helm of the asset-management business. Mr. Patterson helped form the firm's asset-management arm in 2010 to expand MatlinPatterson's investments beyond distressed debt to include other strategies such as credit trading, securitized credit and senior credit.

A veteran of Salomon Brothers and Bankers Trust who spends his spare time driving race cars and playing jazz guitar, Mr. Patterson also was influential in orchestrating the sale of a minority stake in MatlinPatterson Asset Management to Swiss insurer Allied World Assurance Co. Holdings in 2012.

The move comes after a tumultuous few years for MatlinPatterson, a pioneer in the distressed investing space. As the firm sought to diversify its credit strategies in 2010, its private-equity business suffered from some soured investments, including Global Aviation Holdings Inc. and Premium Protein Products LLC, which both slipped into bankruptcy.

Operating initially as a division of Credit Suisse First Boston, MatlinPatterson Global Advisers scaled up quickly. After spinning out from Credit Suisse, the firm closed on $2.2 billion for a first control-oriented distressed debt fund in 2002, followed up by a $1.65 billion pool in 2004 and a $5 billion vehicle, which closed in 2007.

That left the firm well capitalized when Lehman Brothers Holdings Inc. collapsed and the housing market went into a tailspin. It moved straight into the mayhem with investments in residential builder Standard Pacific Homes and Flagstar Bank, both of which have stabilized.

In addition to providing investment opportunities, the global financial crisis also opened up recruiting opportunities, which allowed Mr. Patterson to expand the asset-management business.

MatlinPatterson Global Advisers is looking "to clear its plate a bit" before returning to the market to raise another control-oriented fund, Mr. Matlin said, adding that the firm "dug itself a bit of a hole early in the fund."

MatlinPatterson Global Opportunities Partners III LP, which closed in 2007, was generating a 7.46% net internal rate of return as of March 31, according to data published by the California State Teachers' Retirement System.

Mr. Matlin said the firm let its investors know two years ago that Mr. Patterson was transitioning from day-to-day management of the private-equity side to focus full time on the asset-management business.

MatlinPatterson is focused on scaling up its asset-management platform, which on Mr. Patterson's watch grew to $3.5 billion from $800 million over the past two years.

"We've built a strong team and I'm proud of that," said Mr. Patterson. "Now's the right time to pass the baton."

Write to Hillary Canada at [e-mail]

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