Boaz Weinstein’s Saba Capital Management is preparing to raise around $1bn for a new investment strategy aimed at purchasing stressed and illiquid private credit funds, according to people familiar with the matter.
The vehicle is designed to acquire positions in funds that are facing valuation pressure and investor redemption demand, as liquidity constraints and concerns around private credit performance continue to build across parts of the market. The fundraising effort is expected to take place over the coming weeks, with the amount not previously disclosed.
The strategy would expand Saba’s activities into both business development companies (BDCs) and interval funds, structures that offer exposure to private lending and credit markets but typically provide limited liquidity to underlying investors.
Private credit has come under increased scrutiny in recent months amid signs of stress in certain parts of the market and growing debate over return expectations. Regulatory attention has also intensified as some funds face pressure from investors seeking early exits from long-term, illiquid structures.
Saba has built its reputation over more than a decade navigating closed-end fund discounts in public markets. According to a press statement, the firm now believes the same dynamics – NAV marks that diverge materially from the prices at which investors can actually exit – are present at scale across both public and private BDCs and interval funds, representing hundreds of billions of dollars of retail capital.
The strategy will target entry points at discounts of 30-40% or greater to NAV, a threshold Saba has already achieved across its investments to date, including its $75m position in BPRE acquired at a 30–40% discount and its tender activities in SREIT. According to Saba, these early results demonstrate that the opportunity is not theoretical – it is already being captured.
Saba believes the question is not whether this space will experience significant stress, but when. Hundreds of billions of dollars of private credit are currently held by retail investors in products that offer limited or no secondary liquidity. Saba intends to be a consistent source of that liquidity – and to have the capital deployed and ready when the need intensifies.
