WASHINGTON (AP):

Private equity firm, the Carlyle Group, said Monday it had raised $1.35 billion (€860 million) for a new fund that it will invest in debt and equity issued by distressed companies.

The new fund comes just weeks after a Carlyle affiliate, Carlyle Capital Corp, collapsed after it borrowed approximately US$20 billion (€12.74 billion) and invested in mortgage-backed securities.

As the value of those securities fell due to the US housing and credit crises, Carlyle Capital's creditors demanded greater collateral. Carlyle Capital shut down last month after defaulting on its loans.

Returning to familiar ground

The new fund, Carlyle Strategic Partners II, is a return to more familiar ground for Carlyle. Most of Carlyle's funds seek to acquire ailing companies, restructure their operations, and then sell them, usually for a large profit.

Carlyle spokeswoman, Ellen Gonda, said the firm's ability to raise US$1.35 billion (€860 million) for the fund "is indicative of how well people understand that this is a different type of investment vehicle" than Carlyle Capital.

Brett Wyard, co-manager of the first Carlyle Strategic Partners fund, said in a statement that "the turbulent economic and capital markets environment" and large amounts of debt held by corporations "creates great opportunities for distressed investing around the globe".

Carlyle manages 60 separate funds with US$81.1 billion (€51.68 billion) in assets.