NORTH AMERICA – The Oregon Public Employees Retirement Fund has voted to invest $400m (€306m) into the Lone Star Fund VIII.
The pension fund had originally planned to invest $300m into the commingled fund, but, according to a spokesman at the scheme, this figure was increased by another $100m at the 1 May board meeting.
This occurred because there was only space for another $500m of equity in the $5bn fund before it became over-subscribed, and the pension fund wanted to make sure it could get as much of its equity into the fund as possible.
In a board meeting document, the pension fund wrote that its investment staff and consultant, Pension Consulting Alliance, believe Lone Star's track record of investing in distressed debt merits investment at this time to take advantage of current market dislocations.
It said the commingled fund is to focus on investments in Europe and the US (80%) and Japan (20%).
Fund VIII will be targeting distressed investments in loans and securities, including single-family residential, corporate and consumer debt products and financially orientated and asset-rich operating companies.
Lone Star already has a major presence in both Europe and the US, with regional offices in Dallas, New York, Washington, DC, London and Frankfurt.
Oregon PERF expects returns for Fund VIII to be similar to those projected for Fund VII.
It made a $200m commitment to this fund and is projecting a net IRR of 26.7%.
The pension fund has a real estate portfolio valued at $7.4bn, as of the end of March, representing 11.9% of its $62.6bn of total plan assets.
The targeted allocation for the asset class is 11%, with a range between 8% and 14%.