One of the largest planned hedge fund launches this year has been delayed amid continuing difficulties in raising start-up funding.

MCapital, a distressed debt specialist fund set up by Mark Devonshire, the former head of Merrill Lynchâ??s principal credit trading division, has been unable to meet its target of raising $300m in seed capital. This means that MCapital will not yet be able to access follow-on commitments of about $1bn.

MCapital is understood to be going ahead with a scaled-down launch this year on the back of investments from two large UK pension funds and a third, undisclosed, European investor.