Reaching $90 billion in assets under management since its start in 2009, DoubleLine Capital LP is exploring new options for growth, possibly even an acquisition, founder Jeffrey Gundlach said.
The fixed-income-oriented firm has hired an investment banking firm, which Mr. Gundlach declined to name, to help DoubleLine source the acquisition of an equity asset manager. He also said he expects to announce fundraising for a distressed debt credit fund for institutional investors this month.
“I never thought we would be at $90 billion so fast,” Mr. Gundlach said of the Los Angeles firm he started after he was fired that same year from TCW Group Inc.
Institutional assets account for about 20% of the firm's AUM, a Pensions & Investments analysis of company data shows.
Mr. Gundlach hopes to raise $500 million to $1 billion for an initial fund that could buy junk and investment-grade corporate securities whose prices have dropped to distressed levels.
At TCW, he had raised a series of vulture funds starting in 2007 that invested in mortgage-backed securities, but this time he is focused on corporate issuances.
Corporate bonds, particularly those issued by energy companies, are vulnerable to price drops because many companies are in a cash-negative position, he said.
At DoubleLine, Mr. Gundlach is the majority shareholder, but more than 40 employees — most of whom followed him from TCW — also are owners.
Oaktree Capital Group LLC, which bought a 20% stake in DoubleLine in 2009, has profited from its investment. The firm received $55 million in investment income from DoubleLine in 2015 as the result of its share.
Mr. Gundlach attributes the firm's growth to solid performance in DoubleLine's strategies, including its flagship $56 billion DoubleLine Total Return Bond Fund.
For the year ended Dec 31, the DoubleLine Total Return Bond Fund posted a 2.8% return, compared with the Barclays U.S. Aggregate bond index returns of 0.55%, show data from eVestment LLC, Marietta, Ga. For the three- and five-year periods through Dec. 31, it showed annualized returns of 3.48% and 6%, respectively, compared with the benchmark's 1.44% and 3.25%.
Timing also helped DoubleLine grow its assets under management, Mr. Gundlach said.
He said management upheaval in 2014 at Pacific Investment Management Co., when the firm's top officials Mohamed El-Erian and William Gross left, caused some investors to move institutional assets from PIMCO's Total Return Fund into DoubleLine's Total Return Bond Fund.
Mr. Gundlach said he couldn't say how much of DoubleLine's institutional inflows came directly from investors pulling out of PIMCO, but he called 2015 a year of “massive institutional improvement” in terms of institutional flows.
Morningstar Inc. data show the DoubleLine Total Return Bond Fund had net inflows of $3 billion for the first nine months of 2014, but $4.1 billion for the three-month period of October to December. (Mr. Gross left PIMCO on Sept. 26, 2014.)
The DoubleLine Fund recorded $10.5 billion in net inflows in 2015.