Marathon Asset Management, one of nine firms selected in the credit crisis to manage a government-subsidized program to revive the mortgage-bond market, liquidated its fund after handing the U.S. Treasury a 25% return.
The alternative asset manager sold the last of the fund's $1.5 billion of residential and commercial mortgage-backed securities holdings in June, Marathon said in a letter dated Monday. Of the managers chosen for the government's Public-Private Investment Program, Marathon had the highest return on capital with a net multiple of 1.76 times.
“We applaud all PPIP managers, as this program was a resounding success for the U.S. Treasury, the taxpayer and the investors in the program,” Marathon co-founders Bruce Richards and Andrew Rabinowitz, along with money managers Andrew Springer and Stuart Goldberg, wrote in the letter to investors obtained by Bloomberg News.
Mr. Rabinowitz declined to comment on the letter.
The PPIP was started in March 2009 to encourage purchases of devalued real estate loans and mortgage bonds that helped cause the financial crisis and weighed on banks' balance sheets. Originally envisioned to soak up as much as $1 trillion in assets, the Treasury invested $18.6 billion in debt and equity. That included $475 million in equity in Marathon's fund, in which private investors also put $475 million, according to an Aug. 1 quarterly program update on the Treasury's website.
Other PPIP managers included BlackRock, Invesco and AllianceBernstein, which already liquidated their funds. BlackRock said in December it returned money to investors, giving the Treasury a 24% rate of return since October 2009.
Marathon's net internal rate of return since inception was the third-best of the managers chosen, trailing Oaktree Capital Management's 26.3% and Angelo Gordon & Co.'s 25%, according to the Treasury data through June 30 posted in the update.
Marathon, which oversees more than $10 billion, was founded in 1998 and specializes in global credit, including high-yield, bank, distressed and emerging markets bonds, along with structured finance, debt transactions and real estate.
