Billionaire hedge fund manager John Paulson is eyeing a big opportunity in the meltdown of the high-yield credit market, and is in the final stages of readying a new fund to take advantage of the next big distressed debt play.
Paulson's new private equity fund, the Paulson Strategic Partners Fund — which was announced last October and looked to raise $1.5 billion — is focused on investing in less liquid companies in the U.S. and Western Europe, and will be open to investing in all sectors.
The fund is aiming to close its first deal by the early second quarter and has a target return of two times the amount of capital invested, sources said.
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Sources familiar with the fund tell CNBC its focus will be within a few key sectors: industrials, telecom, consumer/retail, media and energy.
The billionaire is no stranger to the distressed investment world, having been involved in 12 out of the 20 largest bankruptcies in the U.S. since 2008. He played a lead role in deals for Delphi, OneWest Bank and Extended Stay America—all of which generated impressive investor returns of 5 times, 3.2 times, and 2.5 times, respectively.
The launch of the fund marks the fifth distressed investing cycle for the storied money manager. Paulson's last foray was in 2007, with his highly lucrative short on the U.S. housing market.