Differentiated Opportunities in Special Situations Investing

Special Situations investing has evolved significantly over the past decade, transitioning from a focus on distressed assets in secondary markets to a more nuanced approach that balances private credit and private equity characteristics. Investors in this space seek to capture the upside potential of equity while maintaining downside protection typically associated with debt-like investments. This hybrid model enables funds to structure deals that offer unique return profiles, including convertible features and warrants, which enhance potential gains. For instance, investing in aviation during the pandemic illustrated how capitalizing on stabilized markets can yield favorable outcomes through strategic execution.