Florida SBA commits to distressed debt

Oaktree and Castlelake have received almost $300 million in commitments from the US pension fund in the second quarter of 2015.

The Florida State Board of Administration (SBA) committed $200 million to the Oaktree Opportunities Fund Xb in the second quarter of 2015.

It also committed $95 million to Castlelake IV LP over the same period, the pension fund manager said.

SBA had previously invested in predecessor funds Castlelake III and Oaktree IX, a spokesman for the pension fund manager told PDI.

Both strategies target distressed debt, an area of focus for the pension fund manager during 2015.

John Kuczwanski, communications manager at SBA, said: “In order to maintain diversification within the asset class [of private equity], distressed debt is a current focus for the fund.”

SBA will concentrate on distressed opportunities in North America and, to a lesser extent, Europe, according to an asset class review by the pension fund in June.

Executives at Oaktree Capital Management said last week that they were still in the process of fundraising for Oaktree Opportunities Fund X, collecting $9.4 billion of the $10 billion goal, as previously reported by PDI.

Management said it would take time to put capital to work and, while not plentiful, they were seeing more distressed opportunities in the energy and commodity market.

Distressed debt returns at Oaktree over the past 12 months have been below historical norms, but executives said they remained patient.

In July, Castlelake closed on its fourth distressed assets fund, Castlelake IV, at $1.9 billion, above its initial $1.5 target. The Minneapolis-headquartered firm has around $4.7 billion in assets under management, according to its website.

Oaktree’s previous distressed fund raised $5 billion in 2013. Its latest Fund X has $3 billion earmarked to deploy immediately and $7 billion on standby in Fund Xb, to allow it greater flexibility.

Oaktree has offered to waive management fees on the capital until invested. The specialist manager has total assets under management exceeding $103 billion, as of 30 June, up 13 percent on a year ago.

The estimated current value of the Florida Retirement System pension fund was $148.6 billion, as of 29 July. Total assets under management were $181.4 billion.